Govt secures $600mn loan at 11% interest rate from SCB London

The government has secured a $600 million commercial loan from a European bank at an unprecedented double-digit interest rate, marking the highest cost of borrowing in Pakistan’s history. 

The deal was struck with Standard Chartered Bank (SCB), London, with Pakistan agreeing to pay an interest rate of approximately 11%. 

The loan is split into two parts: $300 million for liquefied natural gas (LNG) supplies and another $300 million through syndicate financing.

This loan is crucial to meet the conditions for a $7 billion International Monetary Fund (IMF) bailout package, sources from the Ministry of Finance confirmed.

Despite efforts to secure funding from bilateral creditors, the government was left with no choice but to accept the high-interest loan after other avenues of financing closed, officials said. While bilateral creditors agreed to roll over $12 billion in cash deposits, Pakistan needed additional financing to meet IMF conditions.

The IMF has scheduled a board meeting for September 25 to consider Pakistan’s case, after the country received the required financing assurances from its development partners. 

“We are pleased that Pakistan has secured the necessary assurances, allowing the board meeting to proceed,” said IMF Director of Communications Julie Kozack. The new Extended Fund Facility (EFF) follows the successful completion of a nine-month standby arrangement earlier this year.