ISLAMABAD: The Pakistani government has revealed that it secured a $7 billion loan from the International Monetary Fund (IMF) at an interest rate of 5 per cent.
The disclosure came during a meeting of the Senate Standing Committee on Finance, chaired by Senator Saleem Mandviwalla. The committee reviewed the terms of the loans obtained from the IMF and international commercial banks.
Finance Minister Muhammad Aurangzeb, however, dismissed concerns over expensive foreign commercial borrowing, stating that Pakistan will only borrow when necessary and on favourable terms from commercial banks in the future.
“We will ensure full transparency in disclosing all loan details to the committee,” he said.
According to details shared at the meeting, the $7 billion IMF loan carries a roughly 5 per cent interest rate, comprising a 3.37 per cent SDR rate, a 1 per cent margin, and 50 basis points in service charges.
The loan, with a 10-year repayment period including a grace period, will be repaid in 12 semi-annual installments.
Also read: Pakistan obtained IMF loan at over 5 per cent interest rate in 2023, Senate told
The committee was told that loans from Chinese financial institutions and other entities, including the China Development Bank, Industrial and Commercial Bank of China, and Standard Chartered Bank, were secured at interest rates ranging from 7 to 8 per cent. Other financing included loans from the ECO Trade and Development Bank and joint loan facilities.
During the briefing, Finance Minister Aurangzeb said that there no proposal was under consideration to lower the retirement age for government employees to 55 years.
The finance minister also signaled plans to approach the international capital market, mentioning the potential issuance of Panda Bonds later in the current fiscal year.
He highlighted improving economic indicators, noting a 49 per cent year-on-year increase in automobile sales.
Discussing the IMF agreement, Aurangzeb described it as a long-term, comprehensive programme with additional conditions.
“Talks with the IMF on climate financing are also ongoing, with the government tasked with identifying relevant projects to secure such funding,” Aurangzeb said.