ISLAMABAD: Making a return to the international capital market after over two years, Pakistan announced on Wednesday that it had signed an Asian Development Bank-backed agreement for $1 billion Syndicated Term Finance Facility (STFC) with commercial banks, primarily based in the Middle East.

The $1bn facility is partially backed by a policy-based guarantee of the ADB’s “Improved Resource Mobilisation and Utilisation Reform,” it said. Dubai Islamic Bank acted as the sole Islamic global coordinator, while Standard Chartered Bank acted as the mandated lead arranger and bookrunner.

Other financiers include Abu Dhabi Islamic Bank as the mandated lead arranger and Sharjah Islamic Bank, Ajman Bank and Habib Bank Ltd as arrangers.

Pakistan enters international market after two and half years

“The facility is a landmark transaction for the Government of Pakistan that demonstrates strong support from leading financiers in the region,” the Ministry of Finance said. This is a five-year multi-tranche facility, including both Islamic and conventional tranches. The Islamic facility was structured to be fully compliant with Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) standards and accounts for 89pc of the total financing amount. The remaining 11pc is from conventional financing.

AAOIFI is an Islamic international autonomous not-for-profit corporate body that prepares accounting, auditing, governance, ethics and Sharia standards for Islamic financial institutions and the industry.

The transaction is also the first facility supported by ADB’s Policy-Based Guarantee linked to policy reform measures undertaken by any ADB member. The ADB programme is designed to support Pakistan in building long-term fiscal resilience and stability and has facilitated Pakistan’s re-entry into international commercial markets, with significant interest from Middle Eastern banks, the Ministry of Finance stated.

It stated that Pakistan entered the Middle Eastern financial market after nearly two and a half years, the success of which indicates renewed market trust in Pakistan’s fiscal stability and overall improvement in its macroeconomic indicators. This transaction also marks the beginning of a new partnership between the Government of Pakistan and Middle Eastern banks, it added. The Middle Eastern banks had stepped back from providing commercial loans to Pakistan after the collapse of the IMF programme in 2022 as the then government reversed committed policy actions and subsequent economic challenges.

Published in Dawn, June 19th, 2025