ISLAMABAD-The PTI government is continuously borrowing from external sources to repay previous loans and maintain foreign exchange reserves as Pakistan had borrowed $7.22 billion from foreign lenders in six months.

Pakistan had secured $5.78 billion from external sources including multilateral, bilateral and banking sources in six months (July to December) of the current fiscal year (FY20). Meanwhile, Pakistan had also borrowed $1.44 from the International Monetary Fund (IMF) under the Extended Fund Facility (EFF). The latest data of Ministry of Economic Affairs showed that government’s borrowing worth $5.78 billion from multilateral, bilateral and banking sources is over 44.6 percent of the annual borrowing. The government had projected to borrow $12.957 billion from multilateral and bilateral creditors and commercial banks in the year 2019-20.

The documents showed that Pakistan had borrowed $2.71 billion from multilateral, bilateral and banking sources only in the month of December. Officials in Ministry of Finance informed that government is borrowing to repay previous loans and interest payment and maintain the foreign exchange reserves. The Ministry of Finance figures showed that government had repaid $5.3 billion as debt repayment in five months (July to November) of the current fiscal year. The country had paid $2.7 billion as interest payments and $2.6 billion in repayment of maturing debt in the five months period. Despite massive repayment against previous loans, the country’s foreign exchange reserves held by the State Bank of Pakistan (SBP) had increase to $11.5 billion in the December 2019 from $7.2 billion in June 2019.

The breakup of loan of $5.78 billion showed that bilateral countries had given loan of $710.67 million, multilateral had disbursed $2.865 billion and commercial banks had given loan of $1.799 billion during July to December period of the current fiscal year. Meanwhile, the government has also borrowed $407.5 million from Saudi Arabia as short-term.

The data showed that government borrowed $1.799 billion from foreign commercial banks in July to December period. The federal government had budgeted to borrow $2 billion foreign commercial loans during ongoing financial year. China disbursed $391.76 million in the first six months of fiscal year 2019-20. The Islamic Development Bank disbursed $408.21 million in July to December out of the total of $1.1 billion budgeted for the current fiscal year. Asian Development Bank (ADB) disbursed $2.16 billion, United Kingdom (UK) $121.71 million, World Bank $192.96 million, International Fund for Agricultural Development (IFAD) $28.19 million, USA $34.76 million and Japan $24.83 million in the first six months of current fiscal year.

The amount of borrowing from external sources would increase in the months to come. The ministry of finance had already initiated the process of issuing Eurobonds and international Sukuk to raise the foreign exchange reserves of the country. Pakistan has planned to raise at least one billion dollars from international market by issuing Sukuk bonds in next couple of months that would help in building the country’s foreign exchange reserves.