Pakistan Took High Foreign Loans In The Ongoing Fiscal YearPakistan Took High Foreign Loans In The Ongoing Fiscal Year

Pakistan Took High Foreign Loans In The Ongoing Fiscal Year

Pakistan Took High Foreign Loans In The Ongoing Fiscal Year: Pakistan received $9.2 billion in new foreign loans during the first 10 months of the ongoing fiscal year, increasing cumulative borrowing by the PML-N government to over $44 billion in tenure of four years and 10 months.

Pakistan Took High Foreign Loans In The Ongoing Fiscal Year
Pakistan Took High Foreign Loans In The Ongoing Fiscal Year

Chinese commercial loans and issuance of sovereign bonds, the disbursements of foreign loans touched $9.2 billion from July through April of this fiscal year, said officials in the finance ministry.

From July through April, China gave $1.5 billion as project financing and $2.2 billion in commercial loans. In April, Bank of China disbursed $200 million and the China Development Bank released $1 billion.

Pakistan has already contracted a loan of $1 billion from the Industrial and Commercial Bank of China.

In April alone, Pakistan received $1.6 billion as loans and three-fourths of it was contributed by two Chinese commercial banks, they added.

China’s share was $3.7 billion or 40.3%, indicating Pakistan’s heavy reliance on its northern neighbor.

With the fresh borrowing of $9.2 billion, total foreign loans the PML-N government so far obtained during its third stint (July 2013 to April 2018) have now increased to a record $44.2 billion.

Why loans have been obtained

Most of these loans have been obtained to help boost foreign currency reserves, finance a bulging current account deficit and for budgetary support.

A major chunk of $44.2 billion has been spent on non-productive areas of the economy, which has created issues for the government in managing the country’s external debt.

Foreign Reserves At A Crashing Position

Despite obtaining heavy loans, the SBP and finance ministry have failed to retain gross official foreign currency reserves, which stood at $10.8 billion. Since the start of the fiscal year, the central bank has lost one third or $5.4 billion of its total reserves.

The International Monetary Fund (IMF) has predicted that in case of low disbursements, Pakistan’s foreign currency reserves may slip to $9.4 billion by June this year.

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