Islamabad: (RightNow) Pakistan has rejected a $490 million loan offer from the International Trade Finance Corporation, a subsidiary of the Islamic Development Bank Group, due to high interest rates. According to the Ministry of Finance, the loan’s interest rate was 8%, while the government expected 6%.

The Ministry of Finance’s Debt Management Office decided to reject the loan last week. The Economic Affairs Division has been instructed to seek new competitive loans.

Pakistan’s financial needs amount to 28,647 billion rupees, equivalent to 20% of GDP. The federal fiscal deficit is 7,000 billion rupees, while domestic and foreign debt repayments exceed 21,000 billion rupees.

It is noteworthy that the International Monetary Fund has forecasted Pakistan’s current account deficit to remain at 1% of GDP. Last fiscal year, this deficit was equivalent to 22% of GDP.

Previously, Pakistan secured a $300 million loan from Bahrain and Dubai and raised $3 billion through Eurobonds.