The International Monetary Fund (IMF) has criticized Pakistan’s decision to secure a commercial loan from Standard Chartered Bank in London at a steep 11% interest rate, labelling it as unnecessary.
According to an IMF spokesperson, the Fund did not recommend or require Pakistan to engage in such high-interest commercial borrowing, contradicting the Government of Pakistan’s stance that the loan was crucial for the approval of the IMF program to address the external financing gap.
Despite initial reluctance from the Ministry of Finance, the government finalised an agreement for a $600 million loan—the highest interest rate loan Pakistan has contracted to date. After other financing avenues failed, the government felt compelled to accept Standard Chartered’s unfavourable terms.
Read: How Much Interest Has Pakistan Paid on Foreign Loans in Five Years?
A senior government official cited the unavailability of lower interest rates from other banks as the reason for accepting such costly terms. However, the IMF spokesperson clarified that the Fund was unaware of the 11% interest rate loan agreement and reiterated that their program guidelines do not necessitate such high-cost financing.
Read: Shehbaz Sharif Govt Takes Out Pakistan’s Highest Interest Loan Ever
The development illuminates Pakistan’s significant challenges in obtaining affordable financing and the importance of following IMF advice to foster sustainable economic practices.
