Pakistan will pay an interest rate of about 5 percent on the IMF’s new $7 billion bailout package.

This financial arrangement offers a more favorable rate compared to the 7 to 8 percent interest on commercial loans from Chinese banks, including the Bank of China (BoC), China Development Bank (CDB), and the Industrial and Commercial Bank of China (ICBC).

The IMF package includes a 10-year tenor with a grace period, and repayments are structured into 12 equal semi-annual installments. The interest rate is calculated based on the Special Drawing Rights (SDR) rate plus an additional 1 percent. Additionally, a service charge of 50 basis points is applied to each amount drawn from the fund.

In late September, the IMF’s Executive Board concluded the 2024 Article IV consultation and approved a 37-month Extended Arrangement under the Extended Fund Facility (EFF) for Pakistan, amounting to SDR 5,320 million (approximately $7 billion). This decision also facilitated an immediate disbursement of SDR 760 million, equivalent to about $1 billion, providing crucial financial support to Pakistan’s economy.