Finance Minister Muhammad Aurangzeb announced on Tuesday that Pakistan has successfully negotiated the terms for a $1 billion loan from two Middle Eastern banks. The loan agreements, which include a bilateral arrangement and a trade financing deal, carry interest rates between 6% and 7% and have short-term durations of up to one year.
Speaking at the World Economic Forum in Davos, Aurangzeb outlined the loans as part of a broader strategy to secure $4 billion from Middle Eastern commercial banks by the next fiscal year.
Aurangzeb conveyed optimism about Pakistan’s economic trajectory, emphasizing plans to work with credit rating agencies to secure an upgrade to a single B rating. He expressed hope for progress in this area before the fiscal year concludes in June.
Currently classified as “junk,” Pakistan has made incremental improvements in its credit ratings. Moody’s upgraded its rating to Caa2 in August, citing better macroeconomic conditions, while Fitch raised it to CCC+ in July following a staff-level agreement with the International Monetary Fund (IMF).
The country’s efforts to stabilize its economy are bolstered by a $7 billion Extended Fund Facility (EFF) secured from the IMF in September 2024. The first review of this program is scheduled for February 2025, and Aurangzeb remains confident that Pakistan will meet the necessary requirements.
In addition, the government has requested $1 billion from the IMF’s Resilience and Sustainability Trust (RST) to support climate-related projects. Discussions on this request are expected to progress during the upcoming IMF mission, with Aurangzeb hopeful of finalizing the agreement within six to nine months.
This announcement reflects Pakistan’s determined approach to addressing financial challenges and enhancing its position in the global economy.
