Pakistan Opts Against High-Interest Commercial Loans

ISLAMABAD: Pakistan has decided to forgo a planned loan from commercial banks due to the high interest rate, ARY News reported on Wednesday, citing government sources.

The Ministry of Finance had initially agreed to borrow funds at an 11% interest rate but has now opted out following directives from Prime Minister Shehbaz Sharif. The prime minister reportedly instructed the finance ministry to avoid taking on expensive loans.

While an agreement with the commercial banks had been in place, the government is now seeking alternative funding sources at lower interest rates to bridge any financing gaps. According to sources familiar with the development, Pakistan may secure up to $700 million in loans from the International Trade Finance Corporation and the Islamic Development Bank (IDB).

Additionally, Pakistan expects to receive $1 billion from the International Monetary Fund (IMF) during the current fiscal year, with another $2 billion anticipated next year as part of the ongoing program. The IMF is set to disburse an additional $2 billion by fiscal year 2027, with the final $1 billion installment arriving in the 37th month of the program. The first economic review under the Extended Fund Facility is scheduled for March.