The International Monetary Fund (IMF) has questioned Pakistan’s decision to secure a loan at an unusually high interest rate of 11% from a private bank, deeming it unnecessary.
According to a report by Express News, IMF officials clarified that they had not advised Pakistan to take such a commercial loan. The federal government recently entered into an agreement with Standard Chartered Bank to secure $600 million, aimed at bridging the external financing gap.
The government had justified the loan by claiming that it was necessary for the approval of the IMF’s financial program. However, the loan was obtained at one of the highest interest rates Pakistan has agreed to in recent times.
The Ministry of Finance, on the other hand, acknowledged initial hesitations regarding the loan. However, after failing to secure financing from other sources, the government opted for this step. The ministry added that no bank was willing to offer a loan at a lower interest rate, which forced them to proceed with the deal.
On Wednesday, the IMF Executive Board approved a $7 billion loan program for Pakistan. Following this, an IMF spokesperson released a statement clarifying that the IMF was unaware of Pakistan securing the loan at an 11% interest rate and had not recommended any such commercial borrowing, nor was it deemed necessary for the program.
