ISLAMABAD - Pakistan has received $709 million loans from international donors and other countries during two months (July and August) of the ongoing fiscal year to keep its foreign exchange reserves at sufficient level.

The foreign loan helped the country to keep its tumbling foreign exchange reserves at a level to cover three-month import bill. As on September 22, the reserves were $20.051 billion while the State Bank of Pakistan (SBP) reserves were $14.133 billion which are adequate to cover about three months of imports well above the threshold.

Pakistan’s foreign exchange reserves are under pressure during ongoing financial year due to massive repayment worth of $7.4 billion on the previous loans and increasing current account deficit. Pakistan’s reserves are already sharply depleting, as it come down by over $4 billion in less than one year period. The reserves are decreasing due to loan repayment and funding current account deficit, which is widening due to massive increase in imports as against exports and foreign remittances.

Meanwhile, the country would repay $7.4 billion on external debt including $1.6 billion on interest payment during the current fiscal year. Similarly, the country would repay $4.263 billion in 2018-19, $7.07 billion in 2019-20 and $4.571 billion in 2020-21.

According to the official figures of Economic Affairs Division (EAD), the government has borrowed $709 million in just months. Pakistan has taken $253 million loan from the international commercial banks during first couple of months of the current financial year. Meanwhile, China has given $100 million loan to Pakistan. Similarly, the Asian Development Bank (ADB) has also disbursed $78.92 million. The International Bank for Reconstruction and Development (IBRD) has provided $52.99 million and the International Development Association (IDA) of World Bank has given loan of $47.71 million. Islamic Development Bank (IDB) gave a $76.77 million short-term loan in July-August period for crude oil import. Pakistan has also taken $53.21 million from United Kingdom during the period under review.

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. The government had estimated to generate $1 billion from the auction of the Sukuk bond in the year 2017-18. The government is working to make arrangements for floating about $1 billion worth of Sukuk bonds by middle of November.

It is worth mentioning here that the country had obtained massive foreign loans worth $10.6 billion during last fiscal year 2016-17. The government’s borrowing had gone beyond the target of $8 billion for the last fiscal year, as the country had taken $10.6 billion loan. The government had borrowed massively to repay previous loans and enhancing the country’s foreign exchange reserves. Pakistan’s total debt of the government stood at Rs19.6 trillion at end June 2017. The external public debt stood at $62.5 billion.