ISLAMABAD: Amid ongoing economic challenges, the government led by Prime Minister Shehbaz Sharif has successfully secured commitments of foreign loans amounting to $3.2 billion from various international creditors, including a $1.2 billion Saudi Oil Facility (SOF) for the next 12 months, The News reported on Tuesday.
The loan pledges comprise $1.2 billion from Saudi Arabia, $1 billion in commercial loans from Dubai Islamic Bank (DIB), $600 million from Standard Chartered Bank (SCB), and approximately $430 million from the Islamic Development Bank’s International Islamic Trade Finance Corporation (ITFC) facility.
This development follows the approval of a new $7 billion loan programme by the International Monetary Fund’s (IMF) Executive Board last month, which included the disbursement of the first tranche of $1.03 billion (SDR 760 million) to Islamabad.
The borrowing plan for the financial year 2024-25, outlined by the Ministry of Finance, aims to raise around $19.274 billion during the current fiscal year. External inflows of $19.2 billion do not include the borrowing secured from the IMF under the Extended Fund Facility (EFF).
Pakistan is projected to receive $4.56 billion from multilateral creditors, including the World Bank, Asian Development Bank, Islamic Development Bank, and Asian Infrastructure Investment Bank (AIIB), as well as $9.4 billion from bilateral sources, $3.779 billion from commercial banks, $1 billion from international bonds, and $0.5 billion from Naya Pakistan Certificates.
Sources indicate that the federal secretary of finance recently visited Saudi Arabia, but no agreements were signed during the trip. It is believed he discussed potential terms for finalising the $1.2 billion SOF and the Reko Diq mining project.
The borrowing plan for FY25 underscores the government’s commitment to fulfilling all obligations related to multilateral programme loans projected for disbursement this year. Key loans include the Asian Development Bank’s Climate and Disaster Resilience Enhancement Programme ($400 million), Women Inclusive Finance ($100 million), and Domestic Resource Mobilisation ($300 million).
Additionally, the government intends to roll over bilateral deposits from China ($4 billion) and Saudi Arabia ($5 billion). It plans to refinance foreign commercial loans amounting to approximately $3.878 billion while seeking to raise another $1.2 billion in new commercial debt.
The government also aims to issue Panda Bonds worth around $1 billion in the Chinese capital markets, along with Green Bonds in international markets. The issuance of a Panda Bond, amounting to $300 million, is planned for FY25, with joint financial advisors including China Development Bank and Habib Bank Limited already engaged in the process.
Recognising the profound impacts of climate change, the government aims to establish a sustainable finance framework to promote green financing, counter climate change effects, and meet Sustainable Development Goals (SDGs) targets. The finance ministry is collaborating with sustainability coordinators to explore the issuance of green, social, or sustainability bonds during Q4 of FY25.
