The government of Pakistan is raising a $200 million syndicated loan with three UAE banks
Pakistan needs to raise funds to offset a drop in international reserves and to fill a fiscal deficit which the International Monetary Fund estimates at 5.5 percent of gross domestic product this year. The loan, with a one-year maturity, is being arranged by Commercial Bank of Dubai, Emirates NBD, and Noor Bank, sources close to the matter told Reuters.
Pakistan’s Finance Minister Miftah Ismail confirmed Pakistan was borrowing $200 million and said it would help the country’s debt repayments and would be used to boost the country’s reserves while simultaneously paying out money to different institutions.
Ismail added that the loan may rise to $350 million in coming weeks, and that Pakistan would retire an equivalent amount in local-currency borrowing which he added would change Pakistan’s debt profile, but not increase its overall debt.
Pakistan’s economic growth has surged to above five per cent, but a ballooning current account deficit and a significant decline in foreign currency reserves lead many analysts expect the country to seek a new IMF bailout this year.
Last year Pakistan raised a $2.5 billion bond through a $1 billion Ssukuk and a $1.5 billion conventional bond.
The three UAE banks are now syndicating the debt facility to other lenders, reported Reuters.