Pakistan returns to commercial debt market, clinches $1bn loan facility

ISLAMABAD: In the aftermath of the IMF program, Pakistan has resumed commercial financing from international banks and signed a syndicated loan of $1 billion for five years.

Islamabad is also making arrangements for securing refinancing of a $1.3 billion loan from Chinese banks, and it is expected that a total of $2.3 billion will be obtained by June 30, 2025.

The foreign exchange reserves held by the State Bank of Pakistan are expected to go up in the coming weeks with the help of borrowed dollar inflows. The foreign exchange reserves may go close to $14 billion mark against $11.6 billion standing on June 6, 2025.

The two separate commercial loan facility will help Pakistan to increase its foreign exchange reserves.

According to the Ministry of Finance statement issued on Wednesday, the Ministry of Finance has signed a syndicated term finance facility of $1 billion partially guaranteed by a Policy Based Guarantee of the Asian Development Bank’s (ADB) Program “Improved Resource Mobilization & Utilization Reform”. The sources said that the ADB provided a guarantee of $500 million helping Islamabad to negotiate reasonable deal on the basis of over SOFR (Secured Overnight Financing Rate). The facility is a landmark transaction for the Government of Pakistan that demonstrates strong support from leading financiers in the region.

This transaction also marks the beginning of new partnership of Government of Pakistan with Middle Eastern banks.