Dubai Islamic Bank (DIB) has successfully orchestrated a $1 billion syndicated term-finance facility for the Government of Pakistan. This five-year deal, a collaborative effort with various regional and international financial institutions, is notable for being partially guaranteed by an Asian Development Bank (ADB) Policy-Based Guarantee (PBG)—the first of its kind from ADB for Pakistan.
Key Highlights of the Financing
Approximately 89% of the facility is structured as an AAOIFI-compliant Commodity Murabaha, an Islamic finance arrangement, highlighting the increasing demand for Shariah-based funding and supporting Pakistan’s goal of expanding its Islamic finance sector.
DIB served as the Sole Islamic Global Coordinator, and, alongside Standard Chartered, was a Joint Mandated Lead Arranger and Bookrunner. Other major Islamic banks involved included Abu Dhabi Islamic Bank, Ajman Bank, and Sharjah Islamic Bank.
Perspectives from Pakistan and DIB
Pakistan’s Minister of Finance, Muhammad Aurangzeb, emphasized that this financing arrangement underscores international financial institutions’ confidence in Pakistan’s economic reforms and is a crucial step in accessing innovative, Shariah-compliant funding. He acknowledged DIB and ADB’s vital role in supporting Pakistan’s macroeconomic stability and sustainable growth.
Dr. Adnan Chilwan, Group CEO of DIB, stated that the transaction is a significant achievement, demonstrating how Sharia-compliant financing can effectively meet sovereign needs. He noted that DIB has “re-introduced Pakistan’s credit to the Islamic term financing market” after a two-year break, anticipating that this will open doors for Pakistan to access more Sharia-compliant liquidity in the future. He also highlighted the strong collaboration between all parties involved and how values-driven finance can lead to tangible economic benefits.
Broader Implications
This facility is a milestone in sovereign Islamic finance, blending the strengths of regional and international institutions within a Shariah-compliant framework. The ADB’s guarantee was crucial in enabling Pakistan’s return to the international commercial market, reflecting confidence in the country’s ongoing fiscal reforms and economic resilience.
For Pakistan, it marks a strategic re-engagement with Middle East capital markets after over two years, indicating growing investor trust. For the participating institutions, it provides an opportunity to support sustainable economic development in emerging markets and promote the global adoption of Islamic finance in government funding.
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