ISLAMABAD - The federal government borrowed $7.6 billion in eight months (July to February) of the ongoing financial year, which further increased the overall external debt of the country.
The government has borrowed 94 percent of the annual borrowing in just eight months to sustain the foreign exchange reserves. The country’s reserves are depleting due to widening of current account deficit and repayment of previous loans. For the current fiscal year, the government had estimated to receive $8.094 billion in foreign loans, including $7.692 billion loans and $401.78 million grants. However, the government has borrowed 94 percent only in eight months, which indicated that government would break the previous year’s record of borrowing around $10 billion in a single year.
The International Monetary Fund (IMF) recently estimated Pakistan’s external debt and liabilities could peak to $144 billion in the next five years from $93 billion in the current financial year of 2018. The IMF also estimated that total external debt servicing would reach $19.7 billion by 2023 against $7.739 billion in the FY 2018. The elevated current account deficit and rising external debt service, in part driven by CPEC-related outflows (loan repayments and profit repatriation), are expected to lead to higher external financing needs, which are expected to rise from $21.5 billion (7.1 percent of GDP) in FY 2016/17 to around $45 billion by FY 2022/23 (9.9 percent of GDP), the IMF’s report noted.
According to the official data, the government of Pakistan borrowed $7.6 billion in eight months. The break-up of $7.6 billion borrowing during July-February period of 2017-18 showed that government had raised $2.5 billion from the auction of Euro and Sukuk bonds in international market. Pakistan in November had successfully executed $1.0 billion five years Sukuk and $1.5 billion ten years Eurobond transactions at profit rates of 5.625% and 6.875% respectively.
Another major part of the borrowing of $5.9 billion was from the commercial banks that was recorded at $1.78 billion during eight months 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 gone beyond the limit in just eight months to sustain its foreign exchange reserves. The government is in negotiations with some other foreign banks and expected to sign more agreements in coming months to procure more commercial loans for budgetary support.
According to official documents, the break-up of loans received showed that the Asian Development Bank provided $546.5 million, the International Bank for Reconstruction and Development $98.69 million, the International Development Association of the World Bank $220.6 million and the Islamic Development Bank gave $873.96 million (short-term loan for July-February period for crude oil import).
Pakistan also took $134.7 million from the United Kingdom during the period under review. China gave a loan of $1.1 billion to Pakistan. The USA released $42.91 million in the current fiscal year 2017-18 against the estimates of $117.56 million. The government received no assistance from Italy, Korea, Norway, and UNDP during the first eight months of the current fiscal year (2017-18).
