IMF distances itself from Pakistan govt's loan taken at '11% rate'

An International Monetary Fund spokeswoman clarified on Thursday that the IMF was not aware Pakistan had taken a commercial loan at a rate of 11%, adding that such financing was not required prior to the Executive Board's approval of the new Extended Fund Facility (EFF).

Earlier this month, reports emerged that Pakistan had taken a loan of $600 million from Standard Chartered Bank, London at a rate of 11% — the highest in its history.

The report had quoted government officials as saying the commercial loan was crucial to bridge a financing gap causing delays in the IMF Board's approval.

"It's not in our knowledge that commercial loan at 11% has been undertaken. Such financing is not necessary for program financing assurances," the spokeswoman said on Thursday.

The IMF's Executive Board had approved the $7 billion new EFF on Wednesday. The new program will be spread over 37 months and requires the government to take stringent measures to improve the economy, including widening the tax base and removing subsidies.