Pakistan plans to borrow $4 billion from Islamic Development Bank: Report

Pakistan is planning to borrow over $4 billion from the Islamic Development Bank as part of its efforts to boost its low foreign currency reserves, according to the Financial Times.

The Jeddah-based bank has agreed to make a formal offer to lend Islamabad the money when Imran Khan takes over as prime minister, the newspaper reported on Thursday citing two officials.

Star cricketer-turned-politician Imran is due to be sworn in as premier next week after his July 25 election victory.

The loan would be “an important contribution” but not cover Pakistan’s expected financing gap of at least $25 billion during the current fiscal year, one of the officials said.

One official at the Pakistani central bank who has been involved in latest negotiations with the IDB told the Financial Times the loan had the backing of the Saudi government, “which wants to play a part in rescuing Pakistan from its present crisis”.

Islamabad and Riyadh have moved closer in recent months after Pakistan agreed to send an undeclared number of troops to “train and advise” security forces there.

The non-profit IDB has extended $86.1 billion in financing in the last 10 years for energy, transportation, water and sanitation projects.

Bangladesh, Pakistan and Egypt are among the top beneficiaries.

International Islamic Trade Finance Corp, the financing arm of the IDB for trade activities, agreed to lend Pakistan $3.285 billion, its chief executive said on Apr 5, according to Reuters.

The United States angered Islamabad last week by raising the prospect of opposing any future International Monetary Fund bailout for Pakistan, which its economy badly needs, due to concerns the money would go towards paying off Chinese loans, the news agency reported.

Foreign exchange reserves held by the State Bank of Pakistan increased by 0.19 percent on a weekly basis, The Express Tribune newspaper report citing data released on Thursday.

A week ago, the reserves had swelled around 15 percent following news report that China agreed to immediately give a loan of $2 billion to Pakistan to arrest the slide in foreign currency reserves and provide much-needed breathing space to the new government.

On August 3, the foreign currency reserves held by the central bank were recorded at $10.36 billion after plunging to $9.06 billion on July 13.