By Khalid Qayum
Nov. 15 (Bloomberg) -- Pakistan agreed to a $7.6 billion bailout loan plan with the International Monetary Fund, to help the south Asian country avert defaulting on its debt with the first such program in four years.
The loan ``will be used for the balance of payments and to build our foreign reserves,'' Shaukat Tarin, the finance adviser to the prime minister, said today at a televised news conference in Karachi. The IMF will give the loan in installments over 23 months at interest rate of 3.5 percent to 4.5 percent, he said.
Pakistan was forced to seek funds from the IMF after its foreign-exchange reserves shrank 75 percent in the past year to $3.5 billion last week, the equivalent of one month's imports, and a group of donor nations declined to provide funds.
``The IMF did not give us any condition different from our economic stabilization program,'' Tarin said. ``The IMF counseled us to increase the key interest rate to curb inflation,'' he said.
The State Bank of Pakistan, the nation's central bank, increased its benchmark interest rate by 2 percentage points, the most in more than a decade, to 15 percent on Nov. 12, citing inflation that reached a 30-year high in October.
To contact the reporter on this story: Khalid Qayum in Islamabad at kqayum@bloomberg.net.
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