DAVOS, SWITZERLAND:
Pakistan has secured a $1 billion loan agreement with two Middle Eastern banks, with an interest rate ranging from 6% to 7%, Finance Minister Muhammad Aurangzeb confirmed on Tuesday. The deal involves one bilateral loan and another for trade finance, following the signing of the term sheet during the World Economic Forum annual meeting in Davos.
In August, the Governor of Pakistan’s State Bank revealed the country’s goal of raising up to $4 billion from Middle Eastern commercial banks by the next fiscal year. The loans secured are short-term, with a maturity of up to one year.
Aurangzeb also mentioned plans to engage with credit rating agencies to push for a single B rating, expressing hopes for an upgrade within the coming months, ideally before the fiscal year ends in June. Despite upgrades by Moody’s and Fitch in recent months, Pakistan’s ratings remain deep in sub-investment grade.
The IMF has expressed hopes that Pakistan’s financial position will improve after receiving a $7 billion bailout, with the first formal review set for February. Aurangzeb was optimistic about the upcoming review, stating, “I believe we are on track for a positive outcome.”
Furthermore, Pakistan has requested $1 billion from the IMF’s Resilience and Sustainability Trust (RST), designed to fund climate-related initiatives. Aurangzeb is hopeful that discussions on RST financing will progress during the IMF’s upcoming review mission.
Looking ahead, Aurangzeb was also optimistic about the privatization of Pakistan International Airlines (PIA), which he expects to reach a favorable conclusion within the next six months. The airline has resumed flights to Europe following the lifting of a long-standing EU ban.
