IMF Exposes Pakistan’s 11% Interest Loan Deal

 

Imf

New York: The International Monetary Fund (IMF) has revealed that Pakistan’s decision to secure a loan from a private bank at an unusually high interest rate of 11% was both unnecessary and not recommended by the IMF. In a recent statement, the IMF clarified that it did not instruct Pakistan to pursue this costly commercial loan.

The Pakistani government approached Standard Chartered Bank, seeking $600 million to cover the country’s external financing gap. Officials claimed this loan was crucial for securing approval of the IMF program. However, the loan, agreed upon at an 11% interest rate, marks one of the most expensive borrowing deals Pakistan has ever undertaken.

Initially, the Ministry of Finance showed hesitation, but after failing to secure funds from alternative sources, the government found itself compelled to accept the steep terms of this loan.

IMF Program Restores Confidence: Private banks agree to offer Pakistan $1 billion in loans.

A senior government official explained that no financial institution was willing to provide the necessary loan at a lower interest rate, forcing Pakistan to settle for the high-cost loan.

Meanwhile, the IMF executive board recently approved a $7 billion loan program for Pakistan. Following this development, an IMF spokesperson addressed concerns today, stating that the IMF had no knowledge of Pakistan’s 11% interest loan arrangement.

The spokesperson further emphasized that the IMF never advised Pakistan to secure such a high-interest commercial loan, clarifying that it was not a condition for the continuation or approval of the IMF program.

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