Pakistan seeks $1 billion commercial loan from UAE banks

ISLAMABAD: Pakistan has approached three banks in the United Arab Emirates (UAE) for a $1 billion commercial loan to meet a key condition set by the International Monetary Fund (IMF), ARY News reported on Tuesday, citing sources.

Minister for Finance Muhammad Aurangzeb chaired virtual meetings with three UAE banks, including Sharjah Islamic Bank, Abu Dhabi Islamic Bank, and Ajman Bank, and discussed their support to Pakistan’s development and fiscal objectives, according to a statement by the Finance Ministry.

The Minister highlighted Pakistan’s steady progress toward macroeconomic stability and emphasized that structural reforms in the country form the basis of this recovery.

He appreciated Asian Development Bank’s collaboration and support to Pakistan’s fiscal and development goals.

He underscored that the government is firmly committed to long-term reforms, including restructuring of State-Owned Enterprises, an active privatization program, and rightsizing of the federal government.

The Finance Minister emphasized Pakistan’s shift towards productivity and export-led growth model and reaffirmed its openness to quality commercial partnerships that contribute to economic growth, development financing, and investor confidence.

During the interactive sessions, senior executives of the three banks appreciated the progress made by Pakistan.

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According to sources, the Ministry of Finance formally requested the $1 billion commercial loan as part of efforts to fulfill an IMF condition requiring an increase in foreign exchange reserves.

The government aims to secure the loan by June 30 to help bolster the State Bank of Pakistan’s reserves.

Sources further noted that the IMF has set a target for Pakistan to raise its foreign exchange reserves to $13.9 billion by the end of June.

The State Bank’s net reserves of $14 billion would be sufficient to cover three months of imports.