ISLAMABAD – Pakistan on Thursday formally requested Standard Chartered Bank to reinstate commercial loans ranging from $800 million to $1 billion in order to address its financing gap, which is necessary for obtaining approval from the IMF Executive Board.
The high-level government sources said that the bank had in principle agreed to restore the credit line for Pakistan.
Pakistan has made a similar request to Saudi Arabia to restore the $1.2 billion Saudi oil facility. Once confirmation is received from Saudi Arabia, Pakistani officials plan to sign a Letter of Intent with the IMF Executive Board and send it to them to secure the $7 billion extended fund facility program loan.
However, it remains to be seen how the government will convince commercial banks to provide loans at a double-digit rate (less than 10%).
Given the potential for a decrease in the US Federal Reserve’s policy rate, Pakistani officials want to bring commercial financing to a single-digit rate, which is between 9% and 9.05%.
For commercial loans, the government will also need to seek an exemption from the rules of the Public Procurement Regulatory Authority (PPRA). Pakistan is attempting to roll over $12 billion in loans from Saudi Arabia, China, and the UAE over the course of a year.
Pakistan also seeks $4 billion in refinancing from Chinese commercial banks.
The rollovers of deposited amounts and assurances of refinancing from commercial banks are preconditions for the $7 billion bailout package from the IMF Executive Board.
Pakistan and the IMF reached a staff-level agreement on July 12, 2024, but so far the IMF Executive Board did not include Islamabad’s request in its calendar for consideration by September 13.
According to a statement from the Ministry of Finance, Finance Minister Senator Muhammad Aurangzeb held a virtual meeting with Mr. Sunil Kaushal , Global Head of Corporate and Investment Banking at Standard Chartered, and discussed expanding investment opportunities in Pakistan.
The meeting was also attended by Mr. Rehan Sheikh, CEO of Standard Chartered Pakistan, the Secretary of Finance, and other senior officials from the Finance Division.
During the discussion, the Finance Minister highlighted Pakistan’s positive macroeconomic indicators and expressed the government’s commitment to maintaining economic stability.
Senator Aurangzeb, who is also the finance minister, remarked that the government decided to create a conducive environment for foreign investment to ensure Pakistan remains an attractive and affordable destination for international investors.
The talks focused on potential relations between the Government of Pakistan and Standard Chartered Bank, particularly regarding infrastructure development, digital banking and sustainable financing.
Mr. Kaushal expressed confidence in the outlook of the Pakistani economy and reaffirmed Standard Chartered Bank’s long-term commitment to Pakistan.
