ISLAMABAD - The government, which is continuing to rely on foreign loans to build foreign exchange reserves, took massive loans of $9.3 billion in last financial year (2015-16) from the international financial institutions and countries.
The heavy borrowing has taken the forex reserves to the highest-ever level of $23 billion. The International Monetary Fund (IMF) topped the list of loan providers by disbursing around two billion dollars during the year 2015-16. Similarly, the government received $7.35 billion from multilateral and bilateral donors. However, the foreign donors did not honor their commitment of providing $9.18 billion to the country during previous financial year. Due to the massive borrowing, Pakistan had to spend Rs1.3 trillion on debt servicing during last financial year 2015-16. It is relevant to note here that the government has planned to take $8 billion foreign loans during ongoing financial year (2016-17).
According to the figures of Economic Affairs Division, the government took $1.4 billion from the commercial banks against the budgeted estimates of $200 million loans for the financial year (2015-16). The Asian Development Bank surpassed the budgeted estimates of $1.02 billion as the Bank provided $1.16 billion to Pakistan. World Bank under IDA released $1.4 billion as against the pledge of $1.7 billion. China was expected to be the largest single donor to Pakistan with a budgeted inflow of $3.05 billion, however, it disbursed only $976.43 million to Pakistan, missing the budgeted estimates by $2.073 billion.
Pakistan also raised $500 million from international capital markets in the year 2015-16. The government had originally planned to raise $1 billion from international capital markets during the current year, but decided to limit this to $500m because of a global economic recession and criticism at home for raising expensive loans.
UK disbursed $362.93 million in the last financial year against the estimates of $331.61 million. Meanwhile, USA released $159.9 million, International Bank of Reconstruction and Development (IBRD) $11.39 million and IDB released no money in the month of June, bringing the total disbursement to $159.94 million, $126.34 million and $113.84 million respectively in the last fiscal year (2015-16). Kuwait disbursed $50.5 million, Germany $41.39 million, IDB (S-Term) $861.31 million in the last fiscal year (2015-16).
“A major chunk of the $7.35 billion received as foreign economic assistance has been spent on Public Sector Development Programme (PSDP) projects,” said an official of Economic Affairs Division.