The high-level government sources say has has tentatively agreed to renew the credit line for Pakistan
ISLAMABAD: (UrduPoint/Pakistan Point News-Sept 5th, 2024) Pakistan officially asked Standard Chartered Bank to restore commercial loans ranging from $800 million to $1 billion.
move is crucial for bridging the financing gap required to secure approval from the IMF Executive Board.
According to the high-level government sources, the bank had tentatively agreed to renew the credit line for Pakistan.
The move is crucial for bridging the financing gap required to secure approval from the IMF Executive Board.
In parallel, Pakistan had asked Saudi Arabia to reinstate the $1.2 billion Saudi oil facility.
Upon receiving confirmation from Saudi Arabia, Pakistani officials intend to sign a Letter of Intent with the IMF Executive board and submit it to facilitate the $7 billion extended fund facility program loan.
The challenge remains in persuading commercial banks to offer loans at a rate below 10%.
The Pakistani authorities aim to achieve single-digit financing rates, targeting between 9% and 9.05%, in light of potential reductions in the US Federal Reserve's policy rate.
Besides it, the government would need to seek a waiver from the Public Procurement Regulatory Authority (PPRA) for commercial loans. Pakistan is also negotiating to rollover $12 billion in loans from Saudi Arabia, China, and the UAE over the next year.
Furthermore, the country is seeking $4 billion in refinancing from Chinese commercial banks.
These refinancing and rollover agreements are essential preconditions for the $7 billion bailout package from the IMF. While Pakistan and the IMF reached a staff-level agreement on July 12, 2024, the IMF Executive Board has not yet scheduled consideration of Islamabad’s request by September 13.
In a related development, Finance Minister Senator Muhammad Aurangzeb held a virtual meeting with Mr. Sunil Kaushal, Global Head of Corporate and Investment Banking at Standard Chartered, to explore opportunities for expanding investment in Pakistan.
The meeting was attended by Mr. Rehan Sheikh, CEO of Standard Chartered Pakistan, the Secretary of Finance, and other senior officials.
During the discussions, Senator Aurangzeb emphasized Pakistan’s favorable macroeconomic indicators and reaffirmed the government’s dedication to economic stability. He noted that the government aims to foster a favorable environment for foreign investment to keep Pakistan an attractive and cost-effective destination for international investors.
The talks also covered potential collaborations between the Pakistani government and Standard Chartered Bank, focusing on infrastructure development, digital banking, and sustainable financing.
Mr. Kaushal expressed optimism about Pakistan's economic prospects and reiterated Standard Chartered’s long-term commitment to the country.
