Pakistan Secures $1 Billion Syndicated Loan with ADB Guarantee

The Ministry of Finance of Pakistan has formalized a syndicated term finance arrangement amounting to $1 billion. This agreement is partially backed by a Policy Based Guarantee from the Asian Development Bank’s (ADB) ‘Improved Resource Mobilisation & Utilisation Reform’ initiative, as stated by the Finance Division on Wednesday.

Dubai Islamic Bank served as the exclusive Islamic Global Coordinator, while Standard Chartered Bank took on the role of Mandated Lead Arranger and Bookrunner.

Additional financial institutions involved include Abu Dhabi Islamic Bank in the capacity of Mandated Lead Arranger, along with Sharjah Islamic Bank, Ajman Bank, and HBL as Arrangers.

The ADB has also sanctioned $800 million in funding for Pakistan.

According to the Finance Division, “This facility represents a significant achievement for the Government of Pakistan, highlighting robust support from prominent financial entities in the region.”

Details reveal a 5-year, multi-tranche facility encompassing both Islamic and traditional financial components. The Islamic portion, constituting 89% of the total financing, is structured to adhere fully to the standards set by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). The remaining 11% is sourced from conventional financing methods.

This transaction marks the inaugural facility bolstered by ADB’s Policy-Based Guarantee, which is connected to policy reform measures implemented by Pakistan, an ADB member nation.

The Finance Division noted that the ADB Programme aims to assist Pakistan in establishing lasting fiscal strength and stability. It has facilitated Pakistan’s return to international commercial markets, attracting substantial interest from banks in the Middle East.

The ADB intends to increase its support for food security to $40 billion by the year 2030.

After a hiatus of nearly two and a half years, the government of Pakistan has re-entered the Middle Eastern financial arena. Its success reflects the market’s restored confidence in Pakistan’s fiscal soundness and the overall enhancement of its macroeconomic indicators, according to the Finance Division.

The statement concludes, “This transaction also signifies the commencement of a fresh alliance between the Government of Pakistan and Middle Eastern banks.”