IMF unaware of Pakistan's borrowing at record 11% interest rate

Washington: The International Monetary Fund (IMF) has stated it is unaware of Pakistan obtaining commercial financing at an 11% interest rate.

In a statement released Thursday, an IMF spokesperson emphasized that the organization has not suggested Pakistan seek such high-interest loans. The spokesperson added that there is no need for this type of financing to meet the commitments under Pakistan's existing agreement with the IMF.

Reports had surfaced before the IMF’s Executive Board approved a vital $7 billion loan package for Pakistan, claiming the country had borrowed from international commercial banks at an 11% rate—one of the highest in its history.

This new bailout program, which lasts for 37 months, represents Pakistan's 24th assistance package from the IMF. Its approval allows Pakistan to access additional funds from other international organizations and nations.

The loan approval follows a staff-level agreement reached on July 12. Pakistani officials have confirmed they met all preconditions, including securing $2 billion in extra financing and consolidating $12.7 billion in debt.

Support from China, Saudi Arabia, the UAE, and Kuwait has been crucial, as these nations deferred Pakistan's loan payments for a year.

On Wednesday night, the IMF Executive Board approved the $7 billion loan under the Expanded Fund Facility (EFF), releasing nearly $1 billion immediately to help Pakistan tackle its economic issues and restore stability.

In announcing the new loan program, the IMF reported a modest economic growth rate of 2.4% in the last fiscal year and a significant drop in inflation to single digits. This progress is attributed to the agricultural sector's performance and effective fiscal and monetary policies that helped manage the current account deficit, leading to improved foreign exchange reserves and a decline in inflation.