On Tuesday, Finance Minister Muhammad Aurangzeb announced that Pakistan has finalized a $1 billion loan agreement with two Middle Eastern banks, offering interest rates ranging from six to seven percent. This step is part of Pakistan’s broader strategy to secure additional financing.
In an interview at the World Economic Forum in Davos, Aurangzeb explained that the terms had been set with one bilateral institution and one bank focused on trade finance. He also clarified that these loans are short-term, with a repayment period of up to one year.
The government is actively seeking to bolster its financial position, following a $7 billion IMF bailout secured in September 2024, with the first review scheduled for late February. Additionally, the Finance Minister expressed hopes of improving Pakistan’s credit rating from current sub-investment grade levels. Pakistan aims to discuss a potential upgrade to a “single B” rating with major credit rating agencies before the end of the fiscal year in June.
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Aurangzeb also revealed that the government is continuing talks for further funding from the International Monetary Fund (IMF), specifically through the IMF’s Resilience and Sustainability Trust (RST), which focuses on climate adaptation and cleaner energy transitions. Pakistan, one of the most vulnerable countries to climate change, hopes to receive around $1 billion from this fund.
Regarding privatization efforts, the Minister shared optimism for a successful outcome in the coming months. Pakistan’s attempt to sell a 60% stake in its struggling national airline, Pakistan International Airlines (PIA), had failed in 2024. However, with the lifting of a ban by the EU aviation regulator, PIA’s prospects for recovery appear brighter, and flights to Europe resumed earlier this month.
With these financial strategies in place, Pakistan is working to stabilize its economy and prepare for the future.
