Relending Policy for obtaining fresh foreign loans revised

ISLAMABAD: The government has revised the Relending Policy for obtaining fresh foreign loans as departments, provinces, autonomous bodies and DFIs will have to comply with the same terms and conditions on which the federal government will agree with lenders.

The federal government departments, autonomous bodies and DFIs will be liable to pay 0.25 percent charges in addition to fixed administrative costs. The borrowers shall be liable to bear the exchange risk cost on actual basis and repay the actual amount of principal and interest as paid by the Government of Pakistan to the foreign lender in foreign currency and converted into Rupee equivalent issued by the State Bank of Pakistan. In case of guaranteed loans, a guarantee fee of 0.5% p.a. will be charged from the borrowers on outstanding balance of the loan.

According to the memorandum issued by the government, the Economic Coordination Committee (ECC) of the Cabinet, in its meeting held on 16th December, 2020, approved revision in Relending Policy 2016, which was later ratified by the federal cabinet on 22nd December, 2020.

Accordingly, the Relending Policy 2020 will replace the Relending Policy 2016, issued vide Economic Affairs Division O.M. No. 1(1) SO(DM)/2009 dated 8th September 2016. The Relending Policy 2020 would be effective from 22nd December, 2020 and shall apply to all foreign loans/credits borrowed by the federal government and to federal and provincial government departments, autonomous bodies and Development Financial Institutions (DFIs).

The Relending to borrowers, including provincial governments, federal and provincial entities, departments, autonomous bodies and DFIs, shall be made on the same financing terms and conditions as borrowed by the federal government from the foreign lender. The Relending to provincial governments shall be made on the same financing terms and conditions as borrowed by the federal government from the foreign lender.