Pakistan secured a $1 billion loan from two Middle Eastern banks.

Finance Minister Muhammad Aurangzeb confirms the news in an interview at the World Economic Forum’s annual gathering.

Another step in Pakistan’s efforts to obtain much-needed funding was taken Tuesday when Finance Minister Muhammad Aurangzeb said that the nation has finalized conditions for a $1 billion loan from two Middle Eastern banks.

In an interview at the annual gathering of the World Economic Forum, the loans—which were agreed upon at an interest rate of 6–7%—were confirmed. According to Aurangzeb, the agreements consist of a trade finance arrangement and a bilateral loan, both of which have a one-year maximum length.
As previously announced by State Bank of Pakistan Governor Jameel Ahmad, this is a component of Pakistan’s larger intention to raise $4 billion from Middle Eastern commercial banks by the following fiscal year.

With intentions to work with credit rating agencies for a possible upgrading to a single B rating, Aurangzeb voiced optimism about Pakistan’s economic future. “I hope that some progress in this direction can be made before the end of our fiscal year in June,” he stated.
Pakistan’s rating, which is now in “junk” status, witnessed some improvement earlier this year when Moody’s raised it to Caa2 in August, citing improved macroeconomic conditions. Similarly, after reaching a staff-level agreement with the International Monetary Fund (IMF), Fitch upgraded its rating to CCC+ in July.

Under the $7 billion IMF Extended Fund Facility (EFF) obtained in September 2024, Pakistan seeks to strengthen its financial position. Aurangzeb is hopeful that the program will satisfy the standards for the first evaluation, which is set for late February 2025.

In October, the government also asked the IMF’s Resilience and Sustainability Trust (RST) for $1 billion to support climate-related projects. It is anticipated that discussions will progress with the next IMF visit. “I’m hoping we can get there with the Fund as well in the next six to nine months,” Aurangzeb stated.

Plans to privatize and resurrect Pakistan International Airlines (PIA) were also discussed by Aurangzeb. He expects to make headway in the next five to six months following an unsuccessful attempt to sell a 60% interest in the indebted airline last year.

As a sign of better commercial prospects, the EU recently removed its 4.5-year embargo on PIA, allowing flights to restart to Europe.

Because of Pakistan’s susceptibility to climate change, the government wants to utilize the RST to fund adaptation and sustainable energy transition initiatives. Concessional finance is provided by the program to solve long-term climate issues.

Pakistan is still committed to stabilizing its economy while addressing fundamental deficiencies, even with the IMF assessment and financing arrangements underway. But the government’s determination is still being put to the test by issues with climate money, credit rating upgrades, and privatization.