$1B foreign loan deal reached at interest rate of 7.6 pc
Pakistan and two foreign commercial banks have reached an understanding for a $1 billion loan at an interest rate of around 7.6 percent, which Islamabad is obtaining on the back of Asian Development Bank (ADB) guarantee due to its low credit rating.
The final term sheet and loan disbursement are subject to the approval of the ADB’s $500 million guarantee, which the board of the Manila-based lending agency will approve on May 28. Pakistan can borrow up to $1.5 billion foreign commercial loan against the $500 million guarantee, said government sources.
Ministry of Finance spokesperson Qumar Abbasi did not respond to a question on whether an understanding had been reached between the government and two foreign commercial banks for the ADB-backed $1 billion loan.
Sources said that the government had negotiated a $1 billion loan for five years. It will be the first foreign commercial deal to be signed for a period of five years, which would reduce refinancing risks.
The deal is being negotiated with the Standard Chartered Bank (SCB) and the Dubai Islamic Bank (DIB), said finance ministry officials. They said that the country would pay interest rate equal to the Secured Overnight Financing Rate (SOFR) plus 3.25 percent. This translates into roughly 7.6 percent, which is a floating rate and will change with fluctuations in the SOFR.
Local tractor industry demands stable gst regime
The local tractor manufacturers have raised concern over frequent changes in the general sales tax (GST) regime and called for the inclusion of a stable GST system in the upcoming tractor policy.
During a meeting, the tractor manufacturers expressed their dismay over the high rate of GST, excessive regulatory duties, high markup rates, and the lack of consistent policy frameworks that were presenting significant challenges.
They highlighted frequent GST regime changes, erratic tractor loaning and provincial subsidy schemes, commodity support prices and a non-existent tractor policy. They urged the government to announce a stable GST framework and introduce a national tractor policy to stabilise the sector.
The industry comprises 250 family owned small and medium enterprises (SMEs) and has 30,000 to 35,000 employees. The tractor manufacturers produce 44,203 units per annum.
In power sector, coal share grows
Pakistan’s power sector is shifting as locally mined coal gains a larger share in electricity generation, easing energy costs and reducing dependence on imports.
According to a recent report of Topline Securities, power generation in March 2025 reached 8,409 gigawatt-hours (GWh), marking a 5 percent annual increase and a 21 percent jump from February 2025.
The standout figure, however, was the 62 percent year-on-year surge in electricity produced from local coal, which climbed to 1,393 GWh in March 2025 compared to 862 GWh in the same month of last year. This growth has elevated local coal’s contribution to the national energy mix to 17 percent, up from 11 percent a year earlier, signalling a strategic pivot towards indigenous resources.
Kufpec joins Pakistan offshore bids
Kuwait Foreign Petroleum Exploration Company (Kufpec) has decided to participate in Pakistan’s offshore bidding round. Already, the company has been in Pakistan since 1987 and has invested $1.5 billion cumulatively.
A high-level meeting was held between Federal Minister for Petroleum Ali Pervaiz Malik and Ali Taha Al-Temimi, Country Manager of Kufpec and Chairman of the Pakistan Petroleum Exploration & Production Companies Association (PPEPCA). The meeting focused on strengthening collaboration in Pakistan’s oil and gas sector, enhancing exploration activities, and addressing key challenges to enhance exploration activities.
During discussions, Minister Ali Pervaiz Malik emphasised the government’s commitment to facilitating foreign and local investors in the petroleum sector. He highlighted the ongoing reforms aimed at improving the ease of doing business, ensuring regulatory efficiency, and fostering a conducive environment for exploration and production (E&P) companies operating in Pakistan.
Ali Taha Al-Temimi, representing Kufpec – a leading international exploration company and a subsidiary of Kuwait Petroleum Corporation – appreciated the government’s efforts and shared insights on optimising hydrocarbon exploration to meet Pakistan’s growing energy demand. He apprised that Kufpec is aiming to participate in the offshore bidding round of Pakistan. Moreover, he briefed on the ongoing activities of the company in the country.
Embassy of Pakistan hosts economic dialogue
The embassy of Pakistan in Washington DC hosted an economic dialogue on the sidelines of the IMF and World Bank Spring Meetings, bringing together Pakistan’s economic leadership, global financial institutions, and corporate representatives from the US. The event showcased Pakistan’s remarkable economic turnaround and its potential as a global investment destination.
Finance Minister Muhammad Aurangzeb, in his address, emphasised the pivotal role of the private sector in driving Pakistan’s economic future, stating that the government’s role was to provide policy frameworks and ensure continuity. He described the shift as a “mindset and societal change,” likening it to the transformative impact of artificial intelligence. He responded to questions related to the ease of doing business and reiterated the commitment to reforms.
The finance minister identified population growth and climate change as two major challenges and called for private sector collaboration in different projects by leveraging the available financing and technical expertise. He reaffirmed the PM’s vision of running Pakistan as “Pakistan Inc” with the government acting as public servants to facilitate investors.
Ambassador Rizwan Saeed Sheikh highlighted Pakistan’s geostrategic and geo-economic significance as a market of 250 million people and a gateway to Central Asia, China, the GCC, and Afro-Asian regions.