The International Monetary Fund (IMF) has distanced itself from Pakistan’s decision to arrange a $600 million commercial loan at 11% interest, stating that this financing was not linked to its requirements for securing the recently approved $7 billion bailout package.
An IMF spokeswoman clarified in Islamabad that the fund was not involved in the arrangement, despite Finance Minister Muhammad Aurangzeb’s claim that the loan was linked to the IMF programme.
Also Read: PM Shehbaz Sharif Holds Talks with IMF Chief on Boosting Economic Cooperation
The finance minister had informed the National Assembly’s Standing Committee on Finance that the government had secured the loan to help bridge a $2 billion external financing gap, which was a precondition for the IMF board meeting. The loan, sourced from Standard Chartered Bank, was set up as two parts: $300 million for liquefied natural gas (LNG) supply and another $300 million for syndicate financing.
Following the IMF’s public statement, the likelihood of drawing down the loan has diminished, raising questions about whether the government should have pursued this financing option. Despite the loan offer, the IMF only set a date for its executive board meeting after bilateral creditors agreed to roll over $12.7 billion in maturing loans.
Pakistan faces a massive debt challenge, needing $100 billion over the next four years to stay afloat, with $26 billion required this fiscal year alone. The Asian Development Bank has warned that rising political and institutional tensions could undermine the crucial reforms Pakistan has committed to under the IMF programme, including privatisation, tax reforms, and improving the fiscal viability of the power sector.
