Pakistan’s Ministry of Finance said in a statement that it had signed a syndicated term finance facility of $1,000 million partially guaranteed by a policy-based guarantee of the Asian Development Bank (ADB) programme, ‘Improved Resource Mobilisation and Utilisation Reform’.
Calling the facility a “landmark transaction for the government of Pakistan”, the ministry said it demonstrated a “strong support from leading financiers in the region”.
“This is a five-year multi-tranche facility including both Islamic and conventional tranches,” it added in its statement.
It was revealed that the Dubai Islamic Bank has acted as the Sole Islamic Global Coordinator while Standard Chartered Bank is the Mandated Lead Arranger and Book-runners.
The statement further revealed that other financiers include Abu Dhabi Islamic Bank as the Mandated Lead Arranger and Sharjah Islamic Bank, Ajman Bank and HBL as Arrangers.
The $1 billion transaction is the first facility to be supported by ADB’s policy-based guarantee linked to policy-reform measures undertaken by an ADB member country like Pakistan.
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Expressing confidence in the “renewed trust of the Middle Eastern market in the fiscal stability and the overall improvement in the macroeconomic indicators of Pakistan,” the government’s ministry said the ADB programme was designed to support Pakistan in building long-term fiscal resilience and stability and encouraged Pakistan’s re-entry into international commercial markets.
The ministry said it “marked the beginning of a new partnership of the Government of Pakistan with Middle Eastern banks”.
The deal requires the Islamic facility to be fully compliant with AAOIFI standards, accounting for 89% of the total financing amount, with the remaining 11% from conventional financing.
AAOIFI standards are a set of guidelines developed by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and aim to ensure that Islamic finance practices adhere to Sharia principles and provide a framework for consistent and reliable financial reporting.
Khurram Schehzad, advisor to the Finance Minister, wrote on X: “Pakistan secures $1 billion landmark financing with ADB-backed guarantee and strong Middle Eastern banks’ support.”
Earlier this month, the Philippines-based ADB had approved a $800 million programme to strengthen fiscal sustainability and improve public financial management in Pakistan.
Pakistan was on the brink of bankruptcy in 2023-24. It went on to work its way to stabilise the economy with help from the International Monetary Fund (IMF) with encouraging results last year.
In the first 11 months of the current fiscal year ending on June 30, it has showed a $1.8 billion current account surplus, which has won the confidence of the lenders, including the IMF.
Loans worth USD 1.5 billion for Bangladesh approved by ADB, World Bank
In a development that will help ease the burden of foreign currency reserves on Bangladesh, the World Bank and the Asian Development Bank (ADB) approved loans worth USD 1.5 billion to help the country reform its banking sector and fight climate change, among other issues.
While the ADB approved a USD 900 million loan, of which USD 500 million is directed to be used to stabilise and reform the country’s banking sector, the remaining USD 400 million are for promotion of climate-resilient and inclusive development initiatives, a leading newspaper reported.
The USD 500 million loan is policy-based and aimed at strengthening the country’s governance system, which has been in doldrums since the ouster of the Sheikh Hasina government. It is also to be used to build asset quality and stability within the country’s banking system, said ADB in a statement on Thursday.
Separately, another USD 400 million loan was approved by the ADB for Bangladesh’s second phase of Climate-Resilient Inclusive Development Programme (CRIDP) that will help the country adapt to climate change, cut carbon emissions and foster inclusive economic growth.
The World Bank said on Thursday that it had approved a loan of USD 640 million for two projects that are aimed at augmenting gas supply and improving Bangladesh’s air quality.
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