IMF questions Pakistan’s $600m borrowing on high interest from private bank

NEW YORK: The International Monitory Fund (IMF) has called Pakistan’s borrowing of a loan at 11 per cent from a commercial bank unnecessary, pointing out that the lender never asked the government to take the loan on such a hefty interest rate.

According to sources, the Pakistani government had taken a loan of $600 billion at 11per cent hefty interest rate from the United Kingdom-based Standard Chartered Bank to bridge the internal financing, which was said to be a pre-requisit for obating the new IMF loan of $7 billion.

According to the sources, Pakistan has signed an agreement with the Standard Chartered Bank for the loan at such a hefty interest rate.

Sources underscored that the Standard Chartered Bank was not ready to approve the loan but the government agreed to taking the loan on the exorbitant interest rate of 11 per cent.

Regarding the loan from the Standard Chartered Bank, Finance Minister Muhammad Aurangzeb said earlier that “Initially we hesitated to go for the agreement, but they had to swallow this bitter pill after exhauting all avenues to get the loan on better terms from other financing sources.”

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A senior government official claimed that taking the loan on such a hefty rate was a necessity as no other lenders were forthcoming in this regard.

Earlier, the IMF Executive Board approved a loan of $7 billion Extended Fund Facility (EFF) for Pakistan for a period of 37 months.

On Thursday, an IMF representative clarified that the lender is unaware of Pakistan’s taking the loan from the private commercial bank at the interest rate of 11 per cent .”

“The IMF never asked Pakistan to take such a loan as such a financing is not necessary to fulfill the conditions of the lender for the approval of the new IMF programme,” the representative added.