(Web Desk) – Pakistan has decided to obtain a short-term loan worth $600 million to help stabilize its foreign exchange reserves amid ongoing economic pressures, government sources said.
According to officials, the trade financing facility will be arranged through Standard Chartered Bank in the United Kingdom, with a repayment period expected to range between six and nine months. Sources confirmed that the government has accepted the term sheet for the financing arrangement, and a formal agreement is likely to be finalized soon.
The interest rate on the facility is expected to be approximately 6.3 percent, calculated as the Secured Overnight Financing Rate (SOFR) plus an additional 2.6 percent margin. The SOFR benchmark was recorded at 3.66 percent on Tuesday.
The funds are expected to be used primarily to support payments for crude oil and gas imports, a key component of Pakistan’s external financing needs.
Officials noted that the government had sought a reduction in interest rates on a previously secured $3.5 billion loan from the United Arab Emirates, but no progress has been reported on that front so far.
Pakistan has struggled to secure significant inflows through external commercial borrowing and sovereign bond issuances during the current fiscal year. Data from the Ministry of Economic Affairs shows that only $54 million in commercial loans were received during the first six months, far below the budgeted target of $3.1 billion.
Earlier this week, Pakistan repaid a $700 million loan to the China Development Bank, temporarily reducing the State Bank of Pakistan’s foreign exchange reserves to around $15.5 billion as of February 10. The government expects the loan to be refinanced by June.
The federal government had projected total external financing requirements of approximately $26 billion for the ongoing fiscal year, but so far only $5.7 billion has been secured, including disbursements from the International Monetary Fund (IMF).
Meanwhile, exports declined by 7 percent during the first seven months of the fiscal year, while foreign direct investment dropped by 41 percent to $981 million. Authorities aim to increase official foreign exchange reserves to more than $18 billion by the end of June.
