Maps
Magazine

TRADE & ECONOMY

Pakistan Borrows $7 Billion from IMF at 5% Interest, Reveals Senate Finance Committee
Pakistan secures a $7B loan from the IMF at 5% interest, with a 10-year repayment plan. Also borrowing from Chinese banks at 7-8% interest.
ND
by News Desk
2024-12-11
Pakistan Borrows $7 Billion from IMF at 5% Interest, Reveals Senate Finance Committee

In a recent meeting of the Senate Standing Committee on Finance, it was revealed that Pakistan has borrowed $7 billion from the International Monetary Fund (IMF) at an interest rate of approximately 5%. The details of the loan, which are crucial to understanding Pakistan's economic challenges, were shared during the session chaired by Senator Saleem Mandviwala.

Terms of the IMF Loan

According to the information disclosed during the meeting, the loan from the IMF comes with the following breakdown:

·       Interest Rate: 5% overall, which includes:

    • 3.37% Special Drawing Rights (SDR) rate
    • 1% margin
    • 50 basis points service charges

·       Repayment Period: The loan is to be repaid over a 10-year period, which includes a grace period. The repayment will occur in 12 semi-annual installments.

Additional Borrowing from Chinese Banks and Other Institutions

The committee also revealed that Pakistan has been borrowing from several Chinese banks and institutions, including China Development Bank, Industrial and Commercial Bank of China, and Standard Chartered Bank, with interest rates ranging from 7% to 8%. This high-interest borrowing further complicates the country’s financial situation.

Additionally, Pakistan has sought financing from the ECO Trade and Development Bank, as well as a joint loan facility, to support its financial needs in the wake of economic instability.

Implications for Pakistan's Economy

The revelation about Pakistan's borrowing terms highlights the increasing financial strain the country faces in servicing its external debt obligations. With loans from the IMF, Chinese institutions, and other commercial banks, the government is grappling with high interest rates that add to the fiscal burden.

As Pakistan's external debt continues to grow, the repayment schedules will require the country to balance its financial resources carefully, with the IMF loans contributing to the country’s overall debt servicing obligations over the coming decade.

Conclusion

As Pakistan continues to manage its economic recovery amidst external borrowing, these details shed light on the significant financial commitments the country has undertaken. The combination of loans from international financial institutions and commercial banks, with varying interest rates, presents a complex challenge for Pakistan's fiscal stability in the near future.
Tagged:

PakistanEconomy

IMFLoan

DebtManagement

SenateFinanceCommittee
Share News: