Three United Arab Emirates (UAE) banks have been hired by the government of Pakistan to raise $200 million syndicated loan.
The three banks that have been hired are Commercial Bank of Dubai, Emirates NBD, and Noor Bank.
Pakistan needs funds to balance the decline in international reserves and to control the fiscal deficit which as per the International Monetary Fund is at 5.5% of gross domestic product this year.
Miftah Ismail Pakistan’s Finance Minister confirmed this news that Pakistan is taking the loan of $200 million to repay the debt.
He said, “We are raising this money to boost our reserves. As we pay out money to different institutions, we need to rebuild our reserves.”
Ismail said that the loan can increase to $350m in upcoming weeks.
Adding, “This will change our debt profile but it will not increase our overall debt.”
As per sources, the three UAE banks are syndicating the debt facility to other investors.
Though Pakistan’s economic growth has gone up to more than 5% as per experts Pakistan will seek a new IMF bailout to control the present account deficit and a drop in foreign currency reserves.
In 2017 Pakistan raised $2.5bn bond via $1bn Sukuk and a $1.5bn conventional bond. As the debt is increasing, Pakistan is taking more and more loans. Last year, Pakistan raised $700m 10-year loan from a World Bank unit, International Bank for Reconstruction and Development.
In January 2018 Pakistan’s total debt increased to 21.8 trillion and it is just increasing. At the end of PML-N’s government, Pakistan’s public debt-to-GDP ratio hit an all-time high during the last 15 years reaching 70.1%.