Pakistan secures $300mn loan through UBL at 7.2%-7.7% interest
Wire desk byline Sourced from Xinhua, Dawn, Arab News, Anadolu and Minute Mirror. Translated and abridged by the GSRRA Desk.
First non-Chinese financing in years arranged by UBL through Gulf-based lenders; an additional $100 million facility may follow
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Pakistan has acquired a $300 million commercial loan at interest rates ranging from 7.2% to 7.7%, to address its external financing requirements under the International Monetary Fund (IMF) programme, The Express Tribune reported citing senior government sources.
The loan includes $250 million at a rate of one-year Secured Overnight Financing Rate (SOFR) plus a 3% margin, equivalent to roughly 7.2%. The remaining $50 million was obtained at one-year SOFR plus a 3.5% margin, translating to 7.7%. Both portions are repayable within one year.
The loan was secured from United Bank Limited (UBL), which arranged the facility through Gulf-based lenders.
This marks the first foreign source-based loan outside China since fiscal year 2022, as Gulf and European banks had earlier withdrawn facilities due to Pakistan’s deteriorating credit rating and financial challenges.
This is the second foreign commercial loan acquired in three months. In September, the government obtained a $200 million loan from the Bank of China at an interest rate of approximately 8.5%. The finance ministry shared with the Senate Standing Committee on Finance that this loan was based on a three-month SOFR plus a 3.15% margin.
Senior government officials confirmed that an additional $100 million facility might also be arranged through UBL.
This development could pave the way for more foreign commercial financing, as international banks were previously hesitant to lend due to low ratings.
Earlier this year, Pakistan negotiated a $600 million loan with Standard Chartered Bank at an interest rate of around 11% but later opted not to proceed with the facility.
The IMF has identified a $2.5 billion external financing gap for the current fiscal year, which Pakistan is working to close through various measures. However, the government has yet to secure a $1.2 billion deferred oil payment facility from Saudi Arabia.
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Reference Link:- https://profit.pakistantoday.com.pk/2024/12/20/pakistan-secures-300mn-loan-through-ubl-at-7-2-7-7-interest/
Zamir Ahmed Awan is the founder and Chair of the Global Silk Route Research Alliance, a think tank in Islamabad. He studied engineering at Shanghai University in the 1980s, and years later he went back to China as Pakistan's science counsellor in Beijing, from 2010 until 2016, working on science and higher education cooperation between the two countries.…
