UPDATE 1-Pakistan to borrow $625 mln from consortium of banks to halt rupee slide
(Adds quotes From official, details)
ISLAMABAD, Sept 24 (Reuters) - Pakistan will borrow $625 million from a consortium of seven local and foreign banks to boost reserves and stem a slide in the rupee currency, a senior finance ministry official said on Tuesday.
"Talks with the banks have been taking place for the past few months. Initially they were offering a loan with a 7.77 interest rate, but it was negotiated to 5.75 percent for one year," the official, Rana Asad Amin, told Reuters.
Pakistan is desperate to boost its foreign exchange reserves, which were $10.374 billion in the week ending Sept. 13.
The rupee has lost nearly 7 percent of its value against the U.S. dollar since the new government of Prime Minister Nawaz Sharif came to power in June.
One of the reasons Pakistan imposed a month long ban on gold imports in August, apart from reports of gold smuggling to India, was because the government had been told by forex dealers that a significant amount of trade was used to cover gold imports, a market source told Reuters.
The International Monetary Fund's board approved a $6.7 billion loan package for Pakistan earlier this month to help the South Asian nation revive its ailing economy.
The IMF said the three-year program should help Pakistan rebuild its reserves and prevent a crisis in the balance of payments. IMF loans generally come with conditions for economic reform and should encourage other donors to step in with more funds. (Reporting by Syed Raza Hassan; Editing by Kim Coghill)
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