Pakistan Turns Down $490 Million ITFC Loan Over 8% Cost
Pakistan has turned down a $490 million one-year ITFC loan priced at about 8%, seeking around 6%. Why it said no and what it means for financing.
Pakistan’s Finance Ministry has turned down a $490 million one-year commercial loan from the International Islamic Trade Finance Corporation (ITFC) because its cost, about 8%, was too high, ProPakistani reported on 25 October 2026. The Finance Division had hoped for a rate of around 6%, and has asked the Economic Affairs Division to find a cheaper facility.
Key facts
| Item | Detail |
|---|---|
| Loan | $490 million, one-year commercial facility |
| Lender | International Islamic Trade Finance Corporation (ITFC), part of the Islamic Development Bank Group |
| All-in cost offered | About 8% |
| Rate Pakistan wanted | Around 6% |
| Comparison | Pakistan’s December 2027 bond was trading at about 6.1% |
| Decision by | Debt Management Office, Finance Ministry |
| Next step | Economic Affairs Division to seek a new facility at competitive rates |
Source: ProPakistani report, 25 October 2026. The Finance Ministry has not issued a public statement.
Background: talks on cheaper borrowing
On 15 October 2026, Finance Minister Muhammad Aurangzeb met ITFC chief executive Adeeb Y. Al Aama in Bangkok during the World Bank-IMF annual meetings and asked for lower borrowing costs, according to the Finance Division. The two sides reviewed the remaining financing tranche and agreed that technical teams would look at pricing. ITFC regularly finances Pakistan’s oil and gas imports; it signed a $513 million Murabaha facility for this in July 2025.
Why Pakistan said no
If Pakistan’s own bonds are trading at about 6.1%, paying about 8% for a one-year loan would be expensive. The government has said it wants to replace costly short-term borrowing with cheaper, longer-term financing without increasing external debt, and it is working under an IMF programme that tracks debt costs.
What it means
Rejecting a costly loan saves interest, but Pakistan still needs foreign financing to pay for imports such as oil, whose price has risen sharply this month. If a cheaper facility is not found quickly, the government may have to rely on other lenders or its reserves.
Related: Oil at $116: what it means for Pakistan · Budget 2026-27 guide · Business news
Sources: ProPakistani (25 October 2026); Arab News (15 October 2026), citing the Finance Division. Featured image: AI-generated illustration, for representation only.
