Pakistan finalises $1bn loan deal with Middle Eastern banks

Pakistan has finalised agreements for $1 billion in loans from two Middle Eastern financial institutions, Finance Minister Muhammad Aurangzeb announced in an interview with Reuters at the World Economic Forum in Davos.

The loans, which carry interest rates of 6%-7%, include bilateral and trade financing arrangements with repayment periods of up to one year.

This financing is part of Pakistan’s broader strategy to stabilize its economy, following the $7 billion Extended Fund Facility (EFF) secured from the International Monetary Fund (IMF) in September 2024.

The EFF aims to address Pakistan's medium-term balance-of-payment challenges and structural economic weaknesses.

The first review of Pakistan’s progress under the IMF program is scheduled for February 2025.

Regarding the upcoming review, Aurangzeb expressed optimism, stating, "I do think we are in good stead for that review."

The loans come as Pakistan faces economic difficulties, including a depreciating currency and rising external debt.

The agreements are expected to offer temporary relief as the country works on its financial recovery.