ISLAMABAD               -             The government is continuously borrowing from external sources to repay previous loans and maintain foreign exchange reserves, as Pakistan had borrowed $6.73 billion in nine months (July to March) of the current fiscal year.

The government had borrowed 52 percent of the annual budgeted amount in nine months of the year 2019-20. In current fiscal year, the government had planned to borrow $12.958 billion from external sources. In nine months of the last fiscal year, Pakistan had borrowed $8.167 billion.

The break-up of $6.73 billion showed that Pakistan had received $2.198 billion in the form of program/budgetary support aid from Asian Development Bank, World Bank, Korea and U.K. to restructure Pakistan’s economy. Meanwhile, the country had received $1.799 billion (27 percent) as foreign commercial borrowing to repay maturing international Sukuk and other foreign commercial loans. Similarly, the government had borrowed $1.185 billion (18 percent) to finance its development projects for improving the socio-economic development of the country and remaining $1.487 billion (22 percent) for commodity financing.

During the first nine months of current FY 2019-20, an amount of $4.221 billion was received from multilateral and from bilateral development partners on concessional terms with longer maturity. Amongst the multilateral development partners, Asian Development Bank provided $2.222 billion, Islamic Development Bank $781 million and World Bank $363 million. While from bilateral source, the leading donors were China ($460 million), UK ($128 million), Korea ($94 million) and USA ($50 million).

Meanwhile, Pakistan’s total servicing of external public debt was $5.344 billion in eight months (July to February) of the current fiscal year. Country would repay $10.423 billion in ongoing financial year. The breakup of $5.344 billion showed that $4.190 billion (78 percent of total external public debt servicing) was repaid as principal and $1.154 billion (22 percent) as interest on the outstanding stock of external public debt.

Around 55 percent of total external public debt repaid during FY 2019-20 constitutes the repayments of some of the foreign commercial loans and international Sukuk which was obtained by the previous government.

During the first eight months of current fiscal year, the government settled $1.297 billion worth of foreign commercial loans and repaid $1,000 million worth of international Sukuk issued in December, 2014. Similarly the government has also repaid $1,275 million to multilateral and $618 million worth of external loans of bilateral development partners. 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.