Pakistan plans to 'extend' loan repayment period to meet IMF condition

ISLAMABAD: In a move to fulfil another International Monetary Fund (IMF) requirement, the Pakistan government has prepared a comprehensive strategy to extend the repayment period of both domestic and external loans, ARY News reported on Tuesday, citing sources. 

According to officials, the plan aims to increase the average maturity period for domestic debt from the current 3 years and 8 months to 52 months, while the maturity period for external debt will be extended from the current 6.1 years to 76 months.

The IMF has set 2028 as the deadline for Pakistan to fully implement the new maturity targets.

Sources stated that extending the maturity period will help reduce financing requirements in the coming years.

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An implementation report will be shared with the IMF mission ahead of the next economic review, while execution of the policy will begin within the current fiscal year.

The new framework also stipulates that around 30% of domestic loans will be issued at a fixed policy rate, and the share of Shariah-compliant debt will be increased to 20% over the next three years.

Additionally, the volume of external debt of Pakistan will be capped at no more than 40% of total public debt, the sources said.