# Pakistan turns down $490 million ITFC loan at about 8%, wants money nearer 6%

Source: Searchable (https://searchable.pk/news/economy/pakistan-turns-down-dollar490-million-itfc-loan-at-about-8percent-wants-money)
Type: News article
Author: Searchable Editorial
Published: 25 Oct 2026
Updated: 25 Oct 2026
Retrieved: 26 Oct 2026

> The Islamic Development Bank's trade arm offered a one-year facility at roughly 8%. The finance ministry's debt office said no and asked for cheaper money elsewhere.

**Pakistan has turned down a $490 million (about Rs 136 billion) one-year commercial loan from the International Islamic Trade Finance Corporation (ITFC), the trade-finance arm of the Islamic Development Bank Group, because the price was too high**, [ProPakistani reported](https://propakistani.pk/2026/10/25/pakistan-cancels-0-5-billion-high-interest-loan/) on Sunday 25 October. The Debt Management Office of the Finance Ministry rejected the offer last week.

The ITFC's all-in cost came to **about 8%**. The Finance Division wanted around **6%**, and Pakistan's own dollar bond maturing in December 2027 is trading at a yield of **6.1%**. Borrowing from the ITFC would have meant paying roughly two percentage points more than the market charges Pakistan for similar money.

## What happens now

The government has asked the **Economic Affairs Division** to find a replacement facility at a competitive rate, either from the ITFC on better terms or from another lender. No new deal has been announced.

## Why the price matters

Two percentage points on $490 million is close to $10 million (about Rs 2.7 billion) in extra interest over a year, money that comes out of the federal budget. The decision also tells lenders that Pakistan now thinks it can borrow more cheaply than it could a year ago.

The context, from the same report:

- **Gross financing need for 2026-27:** Rs 28.647 trillion, about 20% of GDP.
- **Net external financing:** Rs 813 billion ($2.8 billion), mostly from multilateral lenders.
- **Recent borrowing:** $3 billion of Eurobonds in September, including a 5.5-year bond at 7.5% and a 10-year bond at 7.9%; a $300 million loan from United Bank Limited in August; and three IsDB loan agreements worth $603 million earlier in the year.
- **Current account:** the IMF projects a deficit of about 1% of GDP, nearly $4.5 billion, against the $2.5 billion to $3 billion Pakistani authorities expect.

## What it means for you

Cheaper government borrowing leaves more room in the budget and less pressure on the rupee. The rupee's daily rate is on our [dollar to rupee page](/data/usd-pkr), and the [policy rate](/data/sbp-policy-rate) and [KIBOR](/data/kibor-1y) pages show what local borrowing costs. If you are comparing savings options while rates move, the [National Savings calculator](/tools/finance/national-savings-calculator) shows current profit on each scheme.

## Frequently asked questions

**Why did Pakistan reject the ITFC loan?**

The $490 million one-year facility cost about 8%, while the Finance Division wanted about 6% and Pakistan's December 2027 bond trades at 6.1%.

## Sources

- Pakistan Cancels $0.5 Billion High-Interest Loan (25 Oct 2026) (ProPakistani): https://propakistani.pk/2026/10/25/pakistan-cancels-0-5-billion-high-interest-loan/

How to cite: "Pakistan turns down $490 million ITFC loan at about 8%, wants money nearer 6%", Searchable, 25 Oct 2026, https://searchable.pk/news/economy/pakistan-turns-down-dollar490-million-itfc-loan-at-about-8percent-wants-money