ISLAMABAD (Dunya News) – The Ministry of Finance has decided not to take loan from Standard Chartered Bank on a high interest rate.
According to sources, the ministry took the decision after receiving the loan from the IMF (International Monetary Fund) under the Extended Fund Facility (EFF).
The Pakistan government in September secured a $600 million commercial loan from the bank at an unprecedented 11% interest rate, the highest cost of borrowing in the country’s history.
Now the government has decided not to obtain any loan on this interest rate, said the sources.
It may be recalled that the loan was taken to meet the financing gap estimated by the IMF when Pakistan sought the global lender’s help. The IMF had estimated the gap at $12 billion over a period of next three years.
Sources said that the prime minister has also directed the ministry not to take loan on high interest rate and instructed the finance minister to strictly implement the IMF programme.
They said in case of financing gap, loans would be obtained from other sources at lower interest rates. This move by the government will violate the loan agreement with the bank, they added.
It would create difficulties if the loan is requested again in the future, they continued.
According to sources, a loan of up to $700 million can be taken from International Trade Finance Corporation and IDB.