UBL arranges $300m financing for Pakistan

KARACHI: United Bank Limited (UBL) has arranged and financed a $300 million short-term loan for Pakistan’s government through its United Arab Emirates and Bahrain branches, the bank said on Monday.

“UBL boasts one of the largest international footprints amongst Pakistani banks, with its international assets exceeding $2.4 billion,” the bank said in a statement. “This deal reaffirms UBL’s ability to offer clients seamless and reliable solutions, both in Pakistan and abroad. UBL enjoys a strong track record of successfully executing complex and high-value transactions,” it added.

UBL believes this transaction supports Pakistan’s external financing needs, in line with its commitments to the International Monetary Fund (IMF). “As Pakistan continues to improve its economic outlook, UBL is committed to play a role as a trusted partner in fostering sustainable economic progress and dedicated to maintaining the highest standards of service and innovation.”

According to media reports that appeared last week, Pakistan’s government obtained this commercial loan at interest rates ranging from 7.2 to 7.7 per cent to meet its external financing requirements under the IMF.

This is the first loan from a foreign source outside of China since fiscal year 2022. Prior to this, facilities had been withdrawn by Gulf and European banks because of Pakistan’s declining credit rating and financial difficulties.

During an analyst briefing after the monetary policy meeting on December 16, Governor of the State Bank of Pakistan Jameel Ahmad said that out of a total of $26.1 billion in external repayments, $10.4 billion has already been paid or rolled over. The remaining debt repayment for the fiscal year, excluding planned rollovers, stands at $5 billion.

Ahmad said that the inflows expected in the third quarter of FY25 from official channels would roughly equal the outflows of $2 billion. He anticipates that foreign exchange reserves will exceed the level of $13 billion by the end of June 2025.

The IMF has projected Pakistan’s cumulative gross external financing requirements over FY25-FY29 at $110.5 billion. Additionally, apart from the IMF-related inflows to bridge the financing requirements, additional prospective financing to the tune of $5 billion has also been made part of the projections over the course of the IMF’s Extended Fund Facility programme in order to cover the financing gap emanating from the IMF’s safeguards assessment (December 2023).