Country borrowed $3.18 billion from external sources in four months

ISLAMABAD-Pakistan borrowed $3.18 billion from external sources during first four months (July to October) of the current fiscal year to maintain its foreign exchange reserves.

The borrowing from external sources remained lower due to the Covid-19, which had slowed down the pace of the development projects in the country. The borrowing in four months is only 26 percent of the total budgeted external loans of $12.233 billion for the entire fiscal year. In the month of October, the government had borrowed $327.79 million external inflows from multiple financing sources including $231.66 million from foreign commercial banks, according to the official of ministry of Economic Affairs.

However, the pace of borrowing might increase in the months to come as the government had planned to issue bonds in international markets to generate reserves. Finance ministry’s spokesperson Kamran Ali Afzal had recently informed media Pakistan would float much delayed Eurobonds ($1-1.5 billion) within two months to shore up foreign exchange reserves. 

The pace of borrowing in first four months of the current fiscal year is higher than the pace in corresponding period of the previous year. External inflows during the corresponding period (July-October) of fiscal year 2019-20 were $2.525 billion which were around 19.5 percent of the annual budgeted amount of $12.958 billion.

According to documents, the government procured $566.27 million loans from foreign commercial banks during July-October period of the year 2020-21. The breakup of $566.27 million showed that Pakistan had taken $34.62 million from Ajman Bank, $200 million from Standard Chartered Bank (London), $216.66 million from Dubai Bank and $115 million were received from the consortium-led by Suisse AG, UBL and ABL. The data also reflects the $1 billion of safe China deposit. The bilateral and multilateral development partners have disbursed $1.965 billion of foreign economic assistance during July-October of current fiscal year (2020-21) against the budgetary estimates of $5.811 billion for fiscal year 2020-21. Amongst the multilateral development partners, mainly Asian Development Bank provided $665 million, Asia Infrastructure Investment Bank (AIIB) $250.01 million, World Bank disbursed $625 million against the budgetary allocation of $2.257 billion while from bilateral sources, France, USA and UK provided $32.65 million, $52.6 million and $13.45 million, respectively.

The Asian Development Bank had recently approved $300 million for Pakistan. The inflow from ADB would increase the volume of loans, which the country had received within current fiscal year. The inflow from the ADB would help in building the country’s foreign exchange reserves. The total liquid foreign reserves held by the country stood at $20.552 billion due to surplus current account in first four months (July to October) of the current fiscal year. The total liquid foreign reserves held by the country stood at US$20.552 billion on 20-November-2020.The break-up of the foreign reserves position shows that foreign reserves held by the State Bank of Pakistan are US$13.415 billion and net foreign reserves held by commercial banks are US$7.136 billion.

Article source: https://nation.com.pk/29-Nov-2020/country-borrowed-dollar-3-18-billion-from-external-sources-in-four-months