FINANCE Minister Muhammad Aurangzeb announced on Tuesday that Pakistan has finalized terms for a $1 billion loan from two Middle Eastern banks, marking another step in the country’s efforts to secure much-needed financing. The loans, agreed at an interest rate of 6-7%, were confirmed during an interview at the World Economic Forum’s annual meeting. Aurangzeb revealed that the agreements include one bilateral loan and one trade financing arrangement, both with a short-term tenure of up to one year. This is part of the plan to raise $4 billion from Middle Eastern commercial banks by the next fiscal year.
The latest arrangement shows growing confidence of global institutions in the credit worthiness of Pakistan as its economy is steadily improving because of prudent policies adopted by the incumbent Government. Pakistan’s credit rating has already improved and it is getting good response from banking institutions and global investors in its efforts to raise necessary funds to meet its financial requirements. Pakistan also plans to launch Yuan-denominated Panda bonds in June to enhance its presence in Chinese capital markets. Apart from this, international media acknowledges Pakistan has witnessed a flurry of visits, investment talks and economic activity involving officials from Saudi Arabia, United Arab Emirates, China and Central Asian nations in recent months. All this is part of a broader strategy to transition Pakistan’s economy toward export-driven growth, with a focus on achieving sustainability in the country’s balance of payments. The interest rate of the new deal seems to be on a somewhat higher side but it is a short-term loan and hopefully the country will successfully pay back within the stipulated timeframe. Finance Minister Muhammad Aurangzeb surely deserves credit for marked improvement in the economic outlook of the country which has encouraged investors to engage with Pakistan in a mutually beneficial manner. True to his commitment to bring about further improvement in the economic conditions of the country, he is having intensive interaction with delegates from different countries during his visit to Davos to brief them about investment opportunities in Pakistan. He is urging global stakeholders to support Pakistan’s journey by investing in priority sectors such as agriculture, Information Technology (IT), renewable energy and pharmaceutical sectors. We hope policies aimed at addressing structural inefficiencies in revenue collection, energy, state-owned enterprises (SOEs) and privatization will yield positive results enabling the country to break free from cycles of external assistance in line with aspirations of all patriotic Pakistanis.
