ISLAMABAD - Pakistan had borrowed $514.55 million from foreign commercial banks in first quarter (July-September) of the current fiscal year 2019-20.

The federal government had budgeted to borrow $2 billion foreign commercial loans during ongoing financial year. The government had borrowed more than 25 percent ($514.44 million) in the first quarter. Borrowing $514.55 million is part of the government’s overall borrowing from multilateral and bilateral creditors and commercial banks in July-September period that stood at $2.08 billion.

The government of Pakistan had projected to borrow $12.957 billion from multilateral and bilateral creditors and commercial banks in the year 2019-20. However, borrowing from International Monetary Fund (IMF) is not part of the $12.957 billion. According to the data of Economic Affairs Division, the country borrowed $1.017 billion from multilateral, $1.418 billion from bilateral and $514.55 million from commercial banks during first quarter of the current fiscal year, making the total borrowing at $2.08 billion. The amount had not included $991 million, which the government had received from the IMF on completion of all prior actions committed by Pakistan before signing the fund programme.

The data showed that government borrowed $514.55 million from foreign commercial banks compared to $70 million during the same period of last year. China disbursed $261.75 million in the first quarter of fiscal year 2019-20. The Islamic Development Bank disbursed $303.68 million in July to September out of the total of $1.1 billion budgeted for the current fiscal year. Asian Development Bank (ADB) disbursed $552.16 million, United Kingdom (UK) $93.94 million, World Bank $83 million, International Fund for Agricultural Development (IFAD) $23.31 million, USA $14.54 million and Japan $15.95 million in the first three months of current fiscal year.

The amount of borrowing from external sources would increase in the months to come. The ministry of finance had already initiated the process of issuing Eurobonds and international Sukuk to raise the foreign exchange reserves of the country. Pakistan has planned to raise at least one billion dollars from international market by issuing Sukuk bonds in next couple of months that would help in building the country’s foreign exchange reserves

The government borrowing would increase in the years to come. The International Monetary Fund (IMF) in its report, the Fiscal Monitor 2019, had projected that Pakistan’s general government debt at 76.7 percent of the GDP in last fiscal year. However, it estimated that debt would further go up to 78.6 percent in ongoing fiscal year (FY20). Later, from next year, the debt would start declining and projected to come down to 76.1pc of GDP. The debt-to-GDP ratio will further reduce to 72.5 percent in FY22 followed by 69 percent in FY23 and 65.4 percent in FY24.