ISLAMABAD: The government of Pakistan Tehrik-e-Insaf has borrowed $10.4 billion in the past six months to manage the widening current account deficit and pay foreign loans.
According to the Ministry of Economic Affairs, the gross foreign loan disbursements during July-December 2021-22 amounted to $9.3 billion while the government received $1.1 billion in foreign loans from the overseas Pakistanis through the Naya Pakistan Certificates. At present, the external debt of Pakistan has exceeded $129 billion mark.
Earlier, Total external debt and liabilities, which were $95.2 billion in June 2018, surged to a record high of $127 billion in Sept-2021, showing a growth of $32 billion under the PTI government.
The cumulative gross foreign loans the PTI government has secured in the first half of current fiscal year were higher by $4.5 billion, or 78%, from the same period of previous fiscal year.
Importantly, the successive governments, including the incumbent one, have failed to ensure required inflows through the non-debt creating sources, i.e., exports and foreign direct investment though the remittances demonstrated a significant improvement over the past two years.
The Debt Policy Statement 2021-22 showed that contrary to the claims of the government that the debt burden was increasing due to the repayment of old loans, the external debt repayments, in fact, decreased $2.1 billion, or 23.3%, in the last fiscal year compared to the preceding year.
The highly expensive Naya Pakistan Certificates-backed loans are a new debt instrument that the Pakistan Tehreek-e-Insaf (PTI) government has added to the list. The $1.1 billion loan from July through December of current fiscal year was acquired at 7% interest rate in dollar terms. The foreign loans of $9.3 billion, reported by the Ministry of Economic Affairs, are inclusive of the $3 billion short-term loan received from Saudi Arabia last month.
However, despite the Saudi Arabian assistance, the gross official foreign exchange reserves dipped to $17.1 billion by mid-January – sufficient to finance hardly 10 weeks of imports.
An amount of $2 billion was received in foreign commercial loans from banks in the first six months of current fiscal year, including $502 million in December. The government borrowed $1.1 billion from Dubai Bank, including a fresh contract for $420 million.
Another loan of $487 million was taken from Standard Chartered Bank, London, according to the economic affairs ministry. A financing of $343 million was secured from Credit Suisse AG.
Overall, 84% of the loans, or $8.7 billion, were taken for non-productive purposes like budget financing, crude oil import and foreign exchange reserves’ building.
