Finance Minister Muhammad Aurangzeb revealed on Tuesday that Pakistan has secured terms for a $1 billion loan from two Middle Eastern banks.
The loans, carrying interest rates between 6 to 7 percent, comprise a bilateral agreement and a trade financing arrangement, both with short-term durations of up to one year.
Aurangzeb disclosed the development during an interview at the World Economic Forum in Davos, emphasizing that this funding aligns with Pakistan’s broader objective to raise $4 billion from Middle Eastern commercial banks by the next fiscal year, as stated by State Bank Governor Jameel Ahmad.
Expressing optimism about Pakistan’s financial prospects, Aurangzeb shared plans to engage credit rating agencies to aim for an upgrade to a single B rating. “I hope to see progress in this regard before the fiscal year concludes in June,” he noted.
Currently rated in the “junk” category, Pakistan has shown gradual improvements this year. Moody’s upgraded the nation’s credit rating to Caa2 in August, citing better macroeconomic stability, while Fitch elevated it to CCC+ in July following Pakistan’s agreement with the International Monetary Fund (IMF).
The $7 billion IMF Extended Fund Facility (EFF), secured in September 2024, underpins Pakistan’s stabilization measures. Aurangzeb expressed confidence in meeting the program’s requirements ahead of its first review in February 2025.
Additionally, Pakistan has requested $1 billion from the IMF’s Resilience and Sustainability Trust (RST) to fund climate initiatives, with discussions set to advance during the upcoming IMF mission. Aurangzeb hopes this process will conclude within six to nine months.
The announcement underscores Pakistan’s commitment to tackling its financial challenges and enhancing its global economic standing.
