ISLAMABAD: Federal Finance Minister Muhammad Aur Nagzeb has said that China, Saudi Arabia and the United Arab Emirates have agreed to rollover a $12 billion loan under existing terms for one year as the International Monetary Fund on August 28. Is about to approve a $7 billion bailout package.
Speaking to the media after the meeting of the Senate Standing Committee on Finance, he said that the three lenders have agreed to roll over the loans as per the existing rules and regulations. Foreign exchange reserves have strengthened compared to a year ago, so there is no point in increasing interest rates on these loans.
He said that the expansion fund will be approved in the meeting of the Executive Board of the IMF. The development marks the end of uncertainty surrounding the meeting, which was dependent on a rollover by the three traditional creditors.
Mohammad and Nagzeb said the $12 billion loan was for 3 to 5 years and needed to be rolled over before the IMF meeting. The IMF announced a $7 billion staff-level deal last month.
The finance minister said that the IMF had identified a gap of 3 to 5 billion dollars for the three-year program which was manageable. Pakistan has also received an offer from a foreign commercial bank but we are waiting for the approval of the IMF board to ask the lender to reduce the interest rate offered.
He added that the government is considering hiring another Chinese financial adviser to secure the rollover of the energy loan. Pakistan has requested a five-year extension of the energy loan, but any agreement will take time to reach. It will take at least two to three years for Chinese power plants to switch from imported coal to local coal. The government has embarked on a privatization program to cut costs and is in the process of closing down ministries.
