Pakistan has secured a $600 million short-term loan from Standard Chartered Bank, headquartered in London, to bolster its foreign exchange reserves. The decision follows lower-than-expected disbursements from foreign commercial loans and sovereign bonds.
Government officials revealed that the loan, which has been accepted under a term sheet, will be used for trade finance purposes over a period of six to nine months. The interest rate on this facility is approximately 6.3%, marginally lower than the 3.5 billion dollar debt cost from the United Arab Emirates, which Pakistan had unsuccessfully requested to be reduced to 3%.
The loan’s interest is pegged to the Secured Overnight Financing Rate (SOFR), currently at 3.66%, plus an additional 2.6%. A formal agreement is anticipated soon, enabling the drawdown against imports of crude oil and gas.
In light of recent economic challenges, Pakistan has been exploring both traditional and new external financing channels. The International Monetary Fund is expected to reassess foreign debt repayments and disbursements to maintain reserve levels.
Despite a budgetary plan to secure $3.1 billion in foreign commercial loans this fiscal year, only $54 million has been received thus far. A $700 million repayment to the China Development Bank temporarily reduced the central bank’s reserves to $15.5 billion as of February 10.
The government aims to increase reserves to over $18 billion by June, relying on remittances, new borrowing, and cash deposits from the UAE, Saudi Arabia, and China. However, exports have fallen by 7%, and foreign direct investment has dropped by 41% in the fiscal year, reflecting ongoing economic uncertainties.
Published in SouthAsianDesk, February 19th, 2026
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