ISLAMABAD -  The government has prepared a short-term plan to finance the soaring current account deficit and repay loans by approaching commercial banks for borrowing and issuing another bond in the international market.

"The government will take loans from the commercial banks," said an official of the Ministry of Finance.

He further said that government is also mulling to issue another Eurobond worth of one billion dollar in the international market, as it did in November last year.

"We are hoping to get some amount from Etisalat against the privatization of Pakistan Telecommunication Company Limited before June this year, as they have recently agreed for the valuation of disputed 33 properties of PTCL," he added.

Pakistan had already borrowed $5.9 billion foreign loans in only six months to meet the increasing external account requirement and maintaining foreign exchange reserves. The government is all set to breach the $8.1 billion target of loans during current financial year keeping in view the current trend of borrowing.

Pakistan's foreign exchange reserves are sharply tumbling and had dipped to $13.2 billion. The reserves would further deplete in the months to come as Pakistan would have to repay around $2.5 to $3 billion to the previous loans.

Meanwhile, the soaring current account deficit is another threat to the foreign exchange reserves of the country.

The official said that one of the best options for the government is to borrow from the commercial banks. Pakistan had already borrowed $1.2 billion from the commercial banks during six months (July-December) of the current fiscal year. The government had projected only $1 billion borrowing from the commercial banks during the entire ongoing financial year.

However, the government had crossed the limit in just six months to sustain its foreign exchange reserves.

Meanwhile, the government is also contemplating to issue another Eurobond worth of one billion dollar in the international market before June this year.

Pakistan had raised an amount of $2.5 billion from the auction of Euro and Sukuk bonds. Pakistan in November last year had successfully executed $1.0 billion five years Sukuk and $1.5 billion ten years Eurobond transactions at a profit rate of 5.625% and 6.875% respectively.

The order book for Pakistan's sovereign papers was over $8 billion. However, the government decided to pick up only $2.5 billion in order to ensure low final yields on the Sukuk and Eurobonds.

The government is also expecting to receive some amount from Etisalat against the privatization of PTCL.  "Etisalat has recently shown its willingness for the valuation of 33 disputed properties of PTCL, which may be around $88 million," the official added.

An Etisalat consortium bought a 26 percent stake in PTCL for $2.6 billion in 2005. The UAE firm paid an initial $1.80 billion as per the deal terms, which also included transferring ownership of the properties to PTCL from the government.

The Etisalat was to pay the remaining $800 million it owed in six twice-yearly installments of $133 million, but has withheld payment as the transfer of some of these properties was stalled. The government had transferred all the properties except 33, which are controversial.