Pakistan has finalised terms for $1 billion in loans from two Middle Eastern financial institutions, Finance Minister Muhammad Aurangzeb revealed during an interview with Reuters on the sidelines of the World Economic Forum in Davos. The loans, carrying interest rates of 6%-7%, include bilateral and trade financing agreements with repayment periods of up to one year.
This financing forms part of Pakistan’s broader strategy to stabilise its economy following the $7 billion Extended Fund Facility (EFF) secured from the International Monetary Fund (IMF) in September 2024. The IMF’s EFF aims to address medium-term balance-of-payment challenges and structural weaknesses in recipient economies. Pakistan’s first review under this program is scheduled for February 2025.
Commenting on the upcoming review, Aurangzeb expressed confidence in Pakistan’s progress under the IMF framework. “I do think we are in good stead for that review,” he noted.
These loans come as Pakistan works to improve its fiscal health amid challenging economic conditions, including a depreciating currency and rising external debt obligations. The agreements are expected to provide temporary relief as the country navigates its financial recovery efforts.
