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.
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.
For More Information & Videos Subscribe To Our YouTube Channel