ISLAMABAD – It has been revealed that the government obtained a $7 billion loan from the IMF at an interest rate of 5%.
The Finance Minister rejected the perception of taking expensive external commercial loans, stating that loans will only be taken when necessary, and any loan from commercial banks will be on their own terms.
The meeting of the Senate Standing Committee on Finance, chaired by Senator Saleem Mandviwala, was held, where details of the loan conditions from the International Monetary Fund (IMF) and global commercial banks were presented.
The meeting disclosed that a loan of $7 billion was acquired from the IMF at an interest rate of approximately 5%, including a 3.37% SDR rate, 1% margin, and 50 basis points service charges. The loan will be repayable to the IMF over 10 years, including a grace period, with repayment in 12 installments on a semi-annual basis.
The meeting also revealed that loans were taken from Chinese banks and other institutions at an interest rate of 7-8%, including the China Development Bank, Industrial and Commercial Bank of China, and Standard Chartered Bank. The ECO Trade and Development Bank and joint loan facilities were also secured.
During the briefing, Finance Minister Muhammad Aurangzeb clarified that there is no proposal under consideration to reduce the retirement age of government employees to 55.
The Finance Minister further rejected the notion of taking expensive external commercial loans, stating that future loans will only be taken when necessary, and will be obtained from commercial banks on terms favorable to Pakistan. He added that the gap in external financing has been filled, and any future loans will be transparently disclosed to the committee.
The Finance Minister also indicated plans to approach the international capital markets soon, with plans for issuing Panda bonds in the current fiscal year. He noted that industrial indicators in Pakistan are improving, with a 49% annual increase in vehicle sales.
He mentioned that the new IMF program is long-term and includes additional conditions. Discussions on climate financing are ongoing with the IMF, and projects will need to be identified for this purpose.
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