Pakistan to not take commercial bank
loan at 11% interest rate
Pakistan has decided not to proceed
with a loan from a commercial bank that carried an 11% interest rate, sources
revealed on Wednesday.
The Ministry of Finance had
initially reached an agreement with the commercial bank for the loan, but the
government has now opted against it. Reportedly, Prime Minister Shehbaz Sharif
directed the finance minister to avoid taking on high-interest loans that could
burden the country's finances.
Read More Pakistan
secures high-interest loan from European Bank to meet its financing needs
Sources familiar with the situation
mentioned that Pakistan will seek alternative financing options at lower
interest rates to cover any potential shortfall. The government is exploring
other sources, including loans up to $700 million from the International Trade
Finance Corporation and the Islamic Development Bank (IDB).
Moreover, Pakistan is expected to
receive $1 billion from the International Monetary Fund (IMF) during the
current fiscal year, with an additional $2 billion anticipated in the following
year. Under the IMF’s 37-month Extended Fund Facility (EFF), Pakistan could
receive a further $2 billion by 2027, with the final $1 billion installment
scheduled for disbursement in the 37th month of the program. The first economic
review of the EFF is set for March.
Read More Banks’
profits reach record high of Rs572 billion amid increased interest rates
The government's decision not to
proceed with the commercial bank loan may violate the terms of the initial
agreement, which could affect future loan negotiations.
Pakistan has participated in 25 IMF
programs since becoming a member in 1950. The latest program, the 37-month EFF,
was approved in September 2024.
Source: Profit Pakistan