Islamabad: In the coming fiscal year, the government intends to borrow roughly $16 billion in gross foreign loans to cover maturing external public debt and finance the budget deficit.
According to Ministry of Finance sources, the expected $15.7 billion borrowings in fiscal year 2021-22 are roughly 10% higher than this year’s revised estimates of foreign economic assistance. They added that the final estimates may alter somewhat due to continuing discussions with the International Monetary Fund (IMF).
Over two-thirds of the foreign loans, according to the sources, will be used to repay maturing external public debt, excluding interest payments.
However, sources said that “The Ministry of Finance has estimated the gross receipts of $15.7 billion from bilateral and multilateral lenders, issuance of Eurobonds, the IMF, and commercial banks for fiscal year 2021-22.”
Moreover, “the new plan consists of floating $2 billion Eurobonds, contracting a record $4.9 billion foreign commercial loans and about $3.1 billion lending by the IMF has also been estimated.
Roughly $16 billion borrowings will be the highest-ever received by the country in a year.
Pakistan’s now $16 billion gross official foreign currency reserves held by the State Bank of Pakistan (SBP) are chiefly consist of borrowings due to the inability to the increasing non-debt. A constant surge in foreign loans is a another factor that has weakened the debt bearing capacity of the country.
Moreover, the present government is planning to address issues of some portion of this yawning gap with the help of foreign borrowings for the coming fiscal year.
In its April report, the IMF forecast SBP reserves at $17.8 billion, which will be hard to achieve without borrowings due to no significant rise in exports or foreign direct investment in the coming fiscal year.
