The government has received a total of $6.7 billion in foreign loans in the first seven months of the current fiscal year, according to a report in Express Tribune.
It also includes a commercial loan of $500 million from China last month which helped Islamabad keep it’s gross official foreign exchange reserves at the current levels.
According to the Economic Affairs Ministry, the government obtained external loans from multiple financing sources. It added that the gross loans were higher by 6 per cent or $380 million over the same period of last fiscal year.
“Considering foreign exchange constraints, financing of development projects and repayments of these huge external public debts compel the incumbent government to further borrow from multiple sources,” the report quoted the Ministry of Economic Affairs as saying.
In January alone, the government of Pakistan received $960 million, which includes $675 million from commercial banks. It was the most expensive loans.
Almost 87% of the foreign loans or $5.8 billion were for budget financing, building foreign exchange reserves and commodity financing. Project financing was a mere $897 million or 13%. Pakistan would pay back these loans after taking new loans because no revenue-generating assets were created by using the amount.
Additionally, China provided $1 billion worth of SAFE deposit. It also extended $1.5 billion in trade financing facility, which was the obligation of the central bank and not counted as part of the $6.7 billion borrowing in the past seven months.
According to the newspaper, China’s continued financial assistance to Pakistan has helped in keeping the gross official foreign exchange reserves at around $13 billion despite the suspension of the International Monetary Fund (IMF) programme. However, the IMF and Islamabad agreed to revive the IMF programme earlier this month.
