ISLAMABAD: Pakistan has applied to the Islamic Development Bank (IDB), the Islamic Trade Finance Corporation (ITFC), and Standard Chartered Bank for a $1.75 billion loan. On Thursday, sources disclosed that the loan was requested for both commercial and commodity objectives. They said that an ITFC loan of $400 million has been requested for the purchase of commodities.
Sources claim that a $350 million grant for project financing has been requested from the IDB and that $1 billion will be sought from Standard Chartered for infrastructure development and other uses. They stated that interest rates on long-term loans might be as low as 5 percent. They went on to say that to get loan approval from the IMF (International Monetary Fund), loans from commercial banks will be obtained at higher rates.
According to Ministry of Finance sources, negotiations are in progress to purchase oil from Saudi Arabia under a deferred payment plan. They decided that because the agreement to buy oil from Saudi Arabia is blocked, the finance ministry is attempting to secure funds from four sources.
The International Monetary Fund (IMF) Executive Board has not yet given Pakistan a timetable for approval of external finance. Recently, a virtual meeting was convened between the Ministry of Finance and the foreign donor delegation to discuss the specifics of external financing.
According to sources, representatives of the Federal Board of Revenue (FBR) attended the meeting as well and provided an explanation of the revenue shortage. Ministry representatives informed the IMF team about the actions of outside funding.
They also talked about extending loans and obtaining fresh funding agreements from friendly nations. The deadline for rolling over loans from friendly nations was provided by ministry representatives and is set for next week.
The sources stated that the IMF required completion of the $12 billion loan rollover as a prerequisite for requesting approval from its Executive Board. This month’s revenue gap needs to be covered, as the IMF delegation has emphasized.
