ISLAMABAD - The government is continuously borrowing from the external sources, as Pakistan obtained $2.5 billion only in four months aimed at stopping foreign exchange reserves from slipping to dangerous levels.

Major part of the borrowing was from the commercial banks that recorded at $1.02 billion during four months (July-October) of the current fiscal year. The country procured $253 million commercial loans from Citibank and procured $269 million from Credit Suisse-led consortium of banks for budgetary support. The consortium consists of Credit Suisse AG, United Bank Limited and Allied Bank Limited. Pakistan had also foreign commercial loan of $500 million from the Industrial and Commercial Bank of China (ICBC).

The government had projected only $1 billion borrowing from the commercial banks during entire ongoing financial year. However, the government had crossed the limit in just months to sustain its foreign exchange reserves. The reserves are pressure due to widening of current account deficit, which surged by 122 percent to $5.013 billion in the first four months (July-October) of the current fiscal year as compared to $2.259 billion of a year ago. The CAD is widening as higher imports growth offset the improvement in exports.

The current account deficit is likely to touch $18 billion by the end of current fiscal year, which would further pressurise the reserve. Pakistan’s foreign exchange reserves had dropped by over $4.5 billion in the past one year due to fast drying up of foreign currency inflows. Pakistan’s official foreign exchange reserves of the State Bank of Pakistan (SBP) are $13.5 billion.

Meanwhile, the government had already initiated a process to generate up to $3 billion by issuing Euro and Sukuk bonds in international market. However, exact amount will be decided after a response from the international market subsequent to road shows in next couple of days. The amount of overall loan would further increase after the auction of bonds. The incumbent government had taken around $35 billion foreign loans during last four years in order to maintain its reserves and repay previous loans. About $17 billion of the total loans taken were utilised to repay the previous debt during last more than four years.

According to the official documents, the government had budgeted foreign assistance of $8.094 billion for 2017-18 including $7.692 billion loans and $401.78 million grants. The government had obtained 30 percent of the annual loans in first four months of the year 2017-18. The break-up of loan received showed that Asian Development Bank (ADB) has disbursed $160.5 million. The International Bank for Reconstruction and Development (IBRD) has provided $69.56 million and the International Development Association (IDA) of the World Bank has given loan of $79.05 million. Islamic Development Bank (IDB) gave a $455.36 million short-term loan in July-October period for crude oil import.

Pakistan has also taken $81.59 million from United Kingdom during the period under review. China has given $417.2 million loan to Pakistan. USA released $22 million in the current fiscal year 2017-18 against the budgeted estimates of $117.56 million. The government has received no assistance from EU, Italy, Korea, Norway, and UNDP during the first four months of the current fiscal year 2017-18.