ISLAMABAD   -   Pakistan borrowed $5.84 billion from external sources during nine months to boost its foreign exchange reserves, which are depleting rapidly.

Pakistan has obtained foreign loans worth of $1.15 billion from multilateral sources, $1.54 billion from bilateral and $3.15 billion from banking sources during nine months (July to March) of the current fiscal year. Total loan taken in nine months stood at $5.84 billion, according to the official data of Economic Affairs Division (EAD).

The loan disbursements from July to March are equal to 60.2 percent of the original annual estimates. Pakistan had estimated to receive $9.69 billion as foreign assistance from bilateral, multilateral and banking sources during current financial year (FY2019). In March alone, the country had borrowed only $2.9 billion from aforesaid sources. The previous government had budgeted estimates of $2 billion from foreign commercial banks for 2018-19. However, the incumbent government had surpassed the level in nine months period. The major chunk from these loans was $2.2 billion commercial loan from China. The $3 billion loan that Pakistan received from Saudi Arabia, $2 billion from United Arab Emirates (UAE) are not part of the aforesaid loan. The Saudi Arabian and UAE’s assistance has been shown on books of the State Bank of Pakistan (SBP). 

Pakistan’s foreign exchange reserves had increased to $17.7 billion after receiving $2.2 billion from China. However, the reserves had started declining due to massive repayment against previous loans. Pakistan’s foreign exchange reserves have declined by $1.0325 billion to $15.99 billion during previous two weeks. The reserves would remain under pressure in next few months due to massive repayment against previous loans.

Pakistan and International Monetary Fund (IMF) are currently holding talks on three years loan programme that would also pave way to receive loans from other multilateral institutions like World Bank (WB) and Asian Development Bank (ADB). Pakistan would borrow up to $8 billion from the IMF. Pakistan would also receive loans from WB and ADB after finalizing the deal with the IMF. The WB would disburse $7 billion loan to Pakistan in next few years while the country would also receive loans from the ADB and IFC. Pakistan has also planned to issue bonds in the international market. All these loans would help in building the country’s foreign exchange reserves.

According to the EAD data, the Asian Development Bank (ADB) disbursed $390.9 million in first nine months of the ongoing fiscal year against the budgeted estimates of $1.38 billion. Pakistan received $1.26 billion from China in the current fiscal year against the budgeted estimate of $840.99 million. USA disbursed $57.25 million, International Development Association (IDA) $165.95 million, UK $80.4 million, France $41.93 million, and Germany $14.15 million in the current fiscal year so far.

The Islamic Development Bank (IDB) had given loan of (S-Term) $506.43 million during nine months of the year 2018-19. The IDB had activated its three-year $4.5-billion oil financing facility for Pakistan in July last year. The International Islamic Trade Finance Corporation (ITFC), a member of the IDB Group would roll over a loan of $4.5 billion to Pakistan in next three year, $1.5 billion in each fiscal year.