Image: Dubai Islamic Bank website
Dubai Islamic Bank (DIB), the world’s first Islamic bank and the largest in the UAE, has announced the successful completion of a $1bn syndicated term-finance facility for the Government of Pakistan. The transaction was arranged in collaboration with a consortium of regional and international financial institutions.
Structured over five years, the facility includes a significant Islamic financing component, with approximately 89 per cent of the total structured as an AAOIFI-compliant Commodity Murabaha. This underlines Pakistan’s continued push to expand its access to Shariah-based funding.
The transaction is notable for being partially guaranteed by a Policy-Based Guarantee (PBG) from the Asian Development Bank (ADB). This marks the first time ADB has provided a PBG for such a financing transaction with Pakistan.
DIB acted as the Sole Islamic Global Coordinator and also served as Joint Mandated Lead Arranger and Bookrunner alongside Standard Chartered. Other participating institutions included Abu Dhabi Islamic Bank, Ajman Bank, and Sharjah Islamic Bank.
Pakistan’s minister of finance, Muhammad Aurangzeb, commented: “This landmark financing arrangement not only underscores the strong confidence of regional and international financial institutions in Pakistan’s economic reform trajectory, but also marks an important step in expanding our access to innovative and Shariah-compliant funding solutions. We deeply value the role of partners like DIB and ADB in supporting our efforts to ensure macroeconomic stability and sustainable growth.”
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Dr. Adnan Chilwan, group chief executive officer of DIB, said: “This transaction marks a key milestone in demonstrating how Sharia-compliant financing can be scaled effectively to meet sovereign objectives while upholding partnership and prudence. DIB is delighted to have re-introduced Pakistan’s credit to the Islamic term financing market after a hiatus of over two years through an innovative structure. We are confident this will pave the way for the Government to access broader pools of Sharia-compliant liquidity in the near future. Developed in close coordination with the Government of Pakistan, the Asian Development Bank, and leading financial institutions, the structure reflects strong alignment between market capabilities and national priorities. It offers a compelling example of how values-driven finance can support tangible, real-economy outcomes. At DIB, we remain committed to enabling such purposeful transactions, ones that serve the present, strengthen resilience, and help shape a more inclusive financial future.”
Pakistan’s fiscal reforms
The transaction serves as a key milestone for sovereign Islamic finance. It demonstrates renewed investor confidence in Pakistan’s fiscal reforms and macroeconomic outlook, while also providing a model for other emerging markets to adopt ethical and cost-effective financing. For the Government of Pakistan, it signifies a strategic return to Middle East capital markets after more than two years. For participating institutions, it opens opportunities to support long-term, sustainable economic development and the broader adoption of Islamic finance in sovereign funding.
