At the World Economic Forum annual meeting in Davos, Pakistan's Finance Minister, Muhammad Aurangzeb, disclosed that Pakistan finalized terms for a $1 billion loan with two Middle Eastern banks at a 6%-7% interest rate. The loans are short-term, extending up to one year.
Aurangzeb aims to elevate Pakistan's credit rating to a single B grade and anticipates an upgrade in the coming months. Moody's upgraded Pakistan to 'Caa2' in August, while Fitch elevated its rating to CCC+ in July, yet both remain below investment grade.
Following a $7 billion IMF bailout in 2024 and ahead of the first review scheduled for late February, Aurangzeb expressed confidence in Pakistan's position. The IMF's Extended Fund Facilities are aiding countries in rectifying long-term balance of payments issues stemming from structural deficiencies.
Pakistan's engagement with the IMF's Resilience and Sustainability Trust, created in 2022, aims to secure funding for climate-related activities, considering its high vulnerability to climate change. Islamabad is preparing for discussions on RST financing during the IMF's forthcoming visit for the EFF program review.
Furthermore, to alleviate financial strain, Pakistan is in the process of privatizing a majority stake in Pakistan International Airlines, seeking to enhance revenues and restructure state-owned enterprises in line with the ongoing bailout agenda. The Minister foresees positive outcomes within the next few months.
The anticipated progress has been attributed to improved business opportunities following the European Union's recent lifting of a ban on Pakistan International Airlines, enabling the resumption of flights to Europe after a 4-1/2 year hiatus.