ISLAMABAD - Pakistan has massively borrowed $1.5 billion from external sources only in three months (July-September) to sustain its depleting foreign exchange reserves.

The government, which is already facing criticism over rising foreign debt, has once again secured borrowed massively from international financial institutions and countries. The government is borrowing to maintain its reserves, which dropped by $4.4 billion in the past one year due to fast drying up of foreign currency inflows. Pakistan’s official foreign exchange reserves of the State Bank of Pakistan (SBP) are $14.158 billion. The reserves would remain under pressure, as the government would have to pay $5.8 billion for foreign debt servicing in the current fiscal year 2017-18.

The government is not sharing exact number of foreign borrowing. However, Finance Minister Ishaq Dar had recently informed the media that debt to GDP ratio has currently gone to 61.6 percent from 60.2 percent of the year 2013. Chief of Army Staff Qamar Javed Bajwa expressed concern about the country’s debts and called for broadening of the extremely low tax base and bringing in financial discipline to break the begging bowl.

The incumbent government had taken around $35 billion foreign loans during last four years in order to maintain its reserves and repay previous loans. About $17 billion of the total loans taken were utilised to repay the previous debt during last more than four years.

The amount of foreign loan would increase in next couple of months, as the government has plan to issue Sukuk and Euro bonds in international market to generate $2-$3 billion to improve its balance of payment. The government had estimated to generate at least $1 billion from the auction of the Sukuk bond in the year 2017-18. The government is working to make arrangements for floating Sukuk bonds by middle of November.

The Ministry of Finance has recently clarified that commercial financing is a normal activity and part of overall financing plan for the current fiscal year. Commercial financing has been planned in terms of budgetary outlay for 2017-18 to bridge resource gap and supplement external buffers, the spokesman added.

The government has borrowed $1.5 billion during July-September of the year 2017-18. Major component of the borrowing was from commercial banks, which stood at $458 million during first quarter of the current fiscal year, according to official documents of Economic Affairs Division (EAD).

The Asian Development Bank (ADB) has disbursed $117.3 million. The International Bank for Reconstruction and Development (IBRD) has provided $59.85 million and the International Development Association (IDA) of World Bank has given loan of $58.77 million. Islamic Development Bank (IDB) gave a $338.9 million short-term loan in July-September period for crude oil import.

Pakistan has also taken $81.59 million from United Kingdom during the period under review. China has given $239.8 million loan to Pakistan. For the year 2017-18, the government had estimated to borrow $8.1 billion from the international sources. The government had planned to take new loans to return a few previous loans and to finance projects of federal, provincial and autonomous bodies.