Pakistan has finalised agreements for a $1 billion loan with two Middle Eastern banks, carrying an interest rate between 6% and 7%, Finance Minister Muhammad Aurangzeb told Reuters. The short-term loans, with a duration of up to one year, were confirmed during the World Economic Forum annual meeting in Davos.
This development aligns with Pakistan’s strategy to bridge its external financing gap. In August 2024, the central bank chief, Jameel Ahmad, stated that the country aims to raise up to $4 billion from Middle Eastern commercial banks by the next fiscal year.
In September 2024, Pakistan secured a $7 billion, 37-month loan program from the International Monetary Fund (IMF), which includes stringent conditions to stabilise the nation’s economy. The first formal review of the IMF’s Extended Fund Facility is scheduled for late February 2025.
Finance Minister Aurangzeb also indicated plans to engage with rating agencies to improve Pakistan’s credit rating to a single B, expressing hope for an upgrade by June 2025. Moody’s had previously upgraded Pakistan’s rating to ‘Caa2’ in August 2024, citing improving macroeconomic conditions, while Fitch raised its rating to CCC+ in July 2024.
Additionally, Pakistan has formally requested $1 billion from the IMF’s Resilience and Sustainability Trust to address climate-related challenges, reflecting the country’s vulnerability to climate change impacts, Reuters reported.
