Pakistan Trying to Get IsDB Financing, Revive Saudi Oil Facility

Pakistan explores syndicate financing from IsDB and seeks Saudi Oil Facility amid IMF concerns over the SOF's viability. [Image via The News]

Pakistan is exploring two options now, including securing syndicate financing from the Islamic Development Bank (IsDB) and making a last-ditch effort to convince Riyadh for provision of the Saudi Oil Facility (SOF), after the IMF raised a red flag about the possibility of SOF.

Prime Minister Shehbaz Sharif has made several visits to the Kingdom of Saudi Arabia (KSA) since assuming power in recent months, but has not yet firmed up the Saudi Oil Facility (SOF). In another effort, the KSA may consider the SOF for next 12 months from January or February 2025.

Islamabad is likely to make a formal request to the IsDB’s ITFC [International Islamic Trade Finance Corporation] arrangement for jacking up its financing for procurement of oil from $400 million to $1 or $1.2 billion depending upon the offered rates for enhanced loan facility.

Also See: Pakistanis welcome Aramco’s new Islamabad outlet

Potential Costs and Implications of ITFC Financing

The syndicate financing facility from ITFC might prove expensive. It would be tied to the Secured Overnight Financing Rate (SOFR), which currently stands at 4.59 percent, plus additional charges. It’s difficult to determine the exact rate for the upcoming facility. However, there are chances that the rate could rise to around 9 to 10 percent once all charges are included. The SOFR is a measure of the cost of borrowing cash overnight using treasury securities as collateral. Transaction data in the US treasury repurchase market calculates it.

Sources said Pakistan had already availed the oversubscribed ITFC facility. Pakistan received around $267 million, exceeding the expected installment of $200 million. Earlier, the IsDB had agreed to extend financing of $400 million to Pakistan. However, Pakistan has now formally requested the IsDB to enhance the facility to $1.2 billion. When contacted last week for comments, Minister for Economic Affairs Ahad Cheema stated, “Both options are open.” He was responding to a query regarding the SOF or ITFC from IsDB.

This news is sourced from The News and is intended for informational purposes only.

News Desk

Your trusted source for insightful journalism. Stay informed with our compelling coverage of global affairs, business, technology, and more.

Recent

What is the Durand Line?

What is Durand Line?

The Durand Line, a 2,670-kilometer border drawn in 1893 between Afghanistan and British India, remains one of South Asia’s many contentious frontiers. Rejected by every Afghan government but recognized internationally, it symbolizes the region’s colonial legacy and ongoing power struggles. This backgrounder explores its origins in the Great Game, the legal and political controversies surrounding it, and its lasting impact on Pakistan-Afghanistan relations and regional security.

Read More »
Can war against terror be won without political consensus?

Can war against terror be won without political consensus?

For over two decades, Pakistan has battled the scourge of terrorism. Yet, despite military successes, the absence of political consensus continues to jeopardize lasting peace. As divisions deepen and populist narratives gain ground, the question remains: can Pakistan truly defeat terror without unity at the top?

Read More »
Shifting Sands: How Multipolar Pragmatism Is Redefining Global Alliances

Shifting Sands: How Multipolar Pragmatism Is Redefining Global Alliances

The world is entering an era of multipolar pragmatism where ideology no longer defines alliances. From NATO’s internal divides to BRICS expansion and regional realignments, states now pursue transactional partnerships driven by national interests. This fluid diplomacy creates both opportunities for middle powers and uncertainty in global governance.

Read More »
Afghan Taliban and Cross Border Terrorism in Pakistan

Afghan Taliban and Cross Border Terrorism in Pakistan

Pakistan is witnessing a sharp rise in terrorist attacks linked to the Afghan Taliban’s support for the Tehreek-e-Taliban Pakistan (TTP). A new study reveals that Afghan nationals now dominate TTP infiltration groups, exposing Kabul’s complicity in cross-border militancy. As violence escalates, Islamabad must balance border control, diplomacy, and de-radicalisation to counter

Read More »
The New Normal: End of Pakistan’s Strategic Restraint

The New Normal: End of Pakistan’s Strategic Restraint

Any hope surrounding the Pakistan–Afghanistan dialogue in Doha is colliding with renewed violence and mutual distrust. Pakistan’s recent precision strikes in Paktika, following a shattered ceasefire and terrorist attacks, signal a shift toward active defense. The talks now hinge on whether Kabul can curb militant sanctuaries and move beyond its victim narrative.

Read More »