ISLAMABAD - The government continued its policy to take foreign loans to build its foreign exchange reserves and repay previous loans, as the country had obtained massive foreign loans worth $10.6 billion during FY2016-17.

The government’s borrowing had gone beyond the target of $8 billion for the last fiscal year, as the country had taken $10.6 billion loan. The government had borrowed massively to repay previous loans and enhancing the country’s foreign exchange reserves. Pakistan’s external debt had already surged to $58 billion by the end of May. Meanwhile, the domestic debt was Rs12,956 billion. The government is paying huge amount on interest payment and previous loans. The government had spent $4.8 billion on repaying external loans and the interest payment during 11 months (July-May) of the year 2016-17.

The government would follow the policy of taking foreign loans during ongoing financial year 2017-18. Pakistan would take foreign loans worth of over $8 billion during present fiscal year. The government’s borrowing policy had irked the Senate Standing Committee on Finance and Revenue. The committee had shown concerns over the soaring country’s debt and sought a report from the Ministry of Finance to devise a strategy for loan repayment.

The break-up of $10.6 billion loan received during the year 2016-17 showed that the government had taken $4.37 billion from the commercial banks during the year 2016-17 as against budgeted target of $2 billion. Similarly, the government had generated $1 billion from the auction of Sukuk bond in international market, according to the official figures of the Economic Affairs Division (EAD).

Pakistan had borrowed $1.6 billion from China during last fiscal year. Major component of Chinese loan, $1.3 billion, was spent on balance of payment support. However, the project loans from China during the period under review were only $565 million. Meanwhile, the Asian Development Bank (ADB) had disbursed $1.6 billion to Islamabad, as against the projection of $1.05 billion. The loans from the World Bank stood at only $664.8 million or 45.9 percent of the annual estimates of $1.5 billion. The Islamic Development Bank (IDB) gave $496.8 million to Pakistan.

The government had also borrowed $26.49 million from Asian Infrastructure Investment Bank (AIIB) in the last financial year which was not budgeted as per the EAD data. The data shows that the government borrowed $5 million from the Eco Trade Bank which was also not budgeted.

International Bank for Reconstruction and Development (IBRD) disbursed $238.83 million including $24.21 million in the month of June against the budgeted estimates of $62.48 million for the current fiscal year, UNHCR disbursed $1.07 million, Japan disbursed $51.13 million against the budgeted $77.13 million for the current fiscal year and UK released $163 million. EU disbursed $111.8 million in the current financial year against the budgeted estimates of $51.12 million.

The country received no assistance from, Korea, Norway, Oman, Saudi Arabia, UNDP and Organisation of the Petroleum Exporting Countries (Opec) during the period under review.