Islamabad: Finance Minister Muhammad Aurangzeb categorically denied any proposal to reduce the retirement age for government employees to 55 years. Addressing the Senate Standing Committee on Finance on Wednesday, he dismissed the idea as baseless and made clear that no such plan was under consideration.
The committee meeting, chaired by Senator Salim Mandviwala, included a detailed review of the terms of external loans obtained from the International Monetary Fund and global commercial banks.
During the briefing, it was revealed that the government obtained a $7 billion loan from the International Monetary Fund at an approximate interest rate of 5%, including a Special Drawing Rights rate of 3.37%, a margin of 1%, and a 50 basis point service charge. This loan is designed to be repaid over 10 years, including a grace period, with repayment scheduled semi-annually in 12 installments.
In addition to IMF loans, the government also borrowed from Chinese banks, including the China Development Bank and the Industrial and Commercial Bank of China, at interest rates of 7-8%. Similar conditions apply to loans from the OECD Trade and Development Bank and syndicated loan facilities.
Aurangzeb refuted allegations of expensive commercial loans, stating that foreign borrowing would only occur when necessary and on terms favorable to Pakistan. He assured the committee that the external financing gap had been addressed, and pledged transparency in future loan agreements.
The minister also revealed plans to return to the international capital market, including issuing panda bonds during the current financial year. He highlighted the improvement in economic indicators and pointed to a 49% year-on-year increase in car sales as a positive sign of industrial recovery.
He also spoke about the new International Monetary Fund program, describing it as long-term and comprehensive, with some additional conditions. Talks with the IMF on climate financing continue, with efforts being made to identify relevant projects in this framework.
By addressing rumors about the retirement age and emphasizing fiscal discipline, Aurangzeb sought to provide clarity and reassurance regarding the government’s economic strategy.