Pakistan has secured a $1 billion loan from two Middle Eastern banks, Finance Minister Muhammad Aurangzeb announced on Tuesday during an interview with Reuters at the World Economic Forum (WEF) annual meeting in Davos. The loan carries an interest rate of 6%-7%.
Aurangzeb specified that the agreement involves two institutions: one providing bilateral financing and the other offering trade finance. Both loans are short-term, with a maturity of up to one year.
This funding comes as Pakistan seeks to bolster its finances following a $7 billion bailout package secured from the International Monetary Fund (IMF) in September 2024. The first review of this IMF Extended Fund Facility (EFF) is scheduled for late February.
Expressing confidence, Aurangzeb stated, “We have the first formal review of the EFF coming through towards (the) end of February… I do think we are in good stead for that review.”
The IMF’s EFF program provides financial support to countries grappling with serious medium-term balance of payments issues stemming from underlying structural weaknesses that require sustained efforts to address.
The $1 billion loan from the Middle Eastern banks represents a significant step in Pakistan’s efforts to stabilize its economy.
