Pakistan plans to borrow $3.2 billion in one-year foreign debt, including a Saudi oil facility.
Pakistan promised a $1.2 billion oil facility to Saudi Arabia, a $1 billion commercial loan to Dubai Islamic Bank, a $600 million loan to SCB and a $430 million loan to Islamic Development Bank’s ITSC. Conveniently obtained.
The borrowing plan presented by the finance ministry for the fiscal year 2024-25 shows that Pakistan plans to borrow $19.274 billion during the current fiscal year. This external revenue figure of $19.2 billion does not include the loan received under the IMF’s Extended Fund Facility (EFF).
Pakistan received $4.56 billion from multilateral lenders such as World Bank, Asian Development Bank, Islamic Development Bank and Asian Infrastructure Investment Bank (AIIB), $9.4 billion from bilateral lenders, $3.779 billion from commercial banks, international bonds 1 billion and expected to get $0.5 billion from Naya Pakistan Certificate
Top sources said that recently the Federal Finance Secretary visited Saudi Arabia, but no agreement was reached during his visit. They are likely to have negotiated terms to finalize the $1.2 billion Saudi Oil Facility (SOF) and Reko Diq deal.
This reporter sent queries to the top officials of the Ministry of Finance last week but did not receive any response from the authorities concerned.
The borrowing strategy for that year demonstrates the government’s commitment to complete all multilateral program borrowing initiatives that are in the works and probably going to be funded in FY 2025.
The Asian Development Bank has committed major multilateral program loans for FY 2025, including: (i) $400 million for the Environment and Natural Disaster Mitigation Program (Sub-Program I); (ii) $100 million for the second sub-program, Financial Inclusion for Women; and (iii) $300 million for the second sub-program, Domestic Resource Mobilization.
Furthermore, the government plans to complete the multilateral development partners’ Performance and Policy Actions (PPAs).
The administration intends to renew $4 billion in deposits from China and $5 billion from Saudi Arabia in terms of bilateral deposits. The government intends to renew approximately $3.878 billion in foreign commercial bank loans. Financial support should be provided again.
In addition, there are plans to raise $1.2 billion in new commercial debt. The government plans to raise about $1 billion by issuing panda bonds in Chinese capital markets and green bonds in international capital markets.
No Eurobonds or International Sukuk are maturing during FY2025.
Pakistan is facing the profound effects of climate change such as changing weather conditions and catastrophic floods. The scale of this climate change increases the need for sustainable finance.
In this regard, the government intends to establish a sustainable financial framework to: (i) promote sustainable and green financing; (ii) combat and prevent the adverse effects of climate change; (iii) ensure adherence to the Sustainable Development Goals (SDGs); and (iv) to meet the targets set by the funds allocated at the national level. For this purpose, the Ministry of Finance is working with the Joint Sustainability Coordinators.
Given the positive macroeconomic developments and available opportunities, the possibility of issuing an initial green, social or sustainability bond will be explored during the fourth quarter of fiscal year 2025.
For Panda Bonds, Islamabad intends to conduct the first issuance of Panda Bonds in the Chinese capital markets. For this purpose, China Development Bank, China International Capital Corporation, Habib Bank Limited, and Citibank are acting as joint financial advisors.
Pakistan plans to borrow $3.2 billion foreign loan commitments for one year
