ISLAMABAD — Dubai Islamic Bank (DIB), the UAE’s largest Islamic bank, has finalised a $1 billion syndicated term finance facility for the Government of Pakistan, marking a significant step in the country’s re-engagement with regional capital markets. The transaction, completed in partnership with a consortium of international and regional financial institutions, includes a major Islamic tranche and is partially backed by a Policy-Based Guarantee (PBG) from the Asian Development Bank (ADB).
The five-year financing package includes a Shariah-compliant Islamic tranche — structured under AAOIFI standards as a Commodity Murabaha — which comprises approximately 89% of the total amount. This structure reflects a rising demand for Islamic finance and aligns with Pakistan’s stated goal of expanding Shariah-based financial solutions.
DIB served as the sole Islamic global coordinator, and jointly acted as mandated lead arranger and bookrunner alongside Standard Chartered Bank, according to details reported by Business Recorder. Other participating banks in the consortium include Abu Dhabi Islamic Bank, Ajman Bank, and Sharjah Islamic Bank.
The financing deal marks the first instance of the ADB providing a Policy-Based Guarantee for a commercial transaction in Pakistan, a move interpreted as a sign of confidence in the country’s economic reform efforts.
“This landmark financing arrangement not only underscores the strong confidence of regional and international financial institutions in Pakistan’s economic reform trajectory, but also marks an important step in expanding our access to innovative and Shariah-compliant funding solutions,” said Finance Minister Muhammad Aurangzeb.
Dr. Adnan Chilwan, Group CEO of DIB, described the deal as a “key milestone” that demonstrates how sovereign entities can scale Islamic finance effectively. He noted that the transaction reopens access to Islamic term financing for Pakistan after more than two years.
“This structure sets the foundation for the government to tap broader pools of Sharia-compliant liquidity,” Chilwan added.
The deal arrives at a time when Pakistan is attempting to diversify its funding sources amid ongoing fiscal adjustments and reforms under the IMF programme. The ADB’s backing was instrumental in lowering risk perceptions and facilitating Pakistan’s return to commercial lending channels.
The government hopes that this successful transaction will serve as a model for future sovereign borrowing through ethical and cost-effective financing frameworks.
