ISLAMABAD: Conceding almost a five per cent interest rate on $7bn loan from the International Monetary Fund (IMF), the government said on Wednesday the external financing gap had been met for the current year, leaving no urgency to access international financial markets until Pakistan’s credit rating improved. Testifying before the Senate Standing Committee, Finance Minister Muhammad Aurangzeb said Pakistan would now tap international financial markets once the credit rating improved to B category as the external financing gap for the current year had been met. He said it was pointless to go for external commercial borrowing with a CCC . He said the government would contract foreign loans only when it was necessary and even borrowing from commercial banks would be made on ‘our own terms’. Reveals govt paying 5pc interest on IMF’s $7bn Extended Fund Facility Mr Aurangzeb disagreed with a notion that Pakistan was taking expensive external commercial loans, saying discussions with international commercial banks had been going on since April, but no decision had been taken so far on taking commercial loans. The finance minister said, however, the government was constantly engaged with rating agencies and an upgrade to B-rating would be a preferred stage to tap international capital markets and this was expected by end of current fiscal year or early next year, starting with Panda Bond in the Chinese market. Documents placed before the Senate panel, led by Senator Saleem Mandviwalla, showed Islamabad has to pay a 3.37pc interest on SDRs (special drawing rights), besides one per cent additional margin and a 50 basis point services charge on each instalment drawn. This works out to a total of 4.87pc markup on the $7bn Extended Fund Facility (EFF) signed in September. Finance Secretary Imdadullah Bosal told the committee the IMF loan had a 4.5 year grace period and 10-year payment schedule in 12 equal semi-annual instalments. The meeting was told that the government had borrowed $7.4bn from foreign commercial banks with general maturity tenor of 24-36 months and their interest rates touched 7-8pc. The minister confirmed the new IMF agreement was extensive and came with additional conditions. He also noted that talks with the IMF on climate financing had been progressing since October and projects would be identified for funding. He assured the panel that the government would maintain complete transparency about future borrowing decisions. The committee was informed that $200 million for balance of payments and budgetary support was borrowed from Bank of China at an interest rate of three-month term (Secured Overnight Financing Rate) SOFR+3.15 margin in September 2024 with 24 months tenor. An additional $300 million was borrowed from the same bank at interest rate of 3-month term at SOFR +3.5pc margin in June 2023 with tenor of 24 months. The government also borrowed $700m from China Development Bank in February at an interest rate of overnight SOFR +2pc margin, with 36 months tenor. Another $1bn was borrowed from the same bank in June last year, at interest rate of overnight SOFR +2pc margin with 36 months tenor. Another RMB7,261.6bn ($1bn) was borrowed in June 2024 at interest rate of 4.5pc with 36 months tenor. Likewise, the government borrowed $500m from Industrial and Commercial Bank of China in March 2023 at interest rate of overnight SOFR +2.95pc margin with 24 months tenor.