ISLAMABAD: Floundering with current account challenges and foreign exchange reserves, the PTI government espoused further than$ 12 billion from abroad in the first seven months of the current financial time (7MFY22), nearly 81 per cent advanced than foreign loans it secured in similar period last time.
The yearly report of the Ministry of Economic Affairs (MEA) on foreign inrushes showed that the government crossed nearly 86pc of the target for foreign backing set for the whole financial time.
This doesn’t include further than$1.2 bn of foreign debt in Naya Pakistan Instruments from overseas Pakistanis which aren’t reported by the MEA. This also doesn’t include about further than$ 1bn secured from the International Monetary Fund which flowed beforehand this month.
This showed the government’s heavy reliance on foreign loans to finance rising current account deficiency and maintain foreign exchange reserves demanded to finance advanced significances and earlier loans.
This was apparent from the fact that the periodic budget target for foreign debt was set at$14.088 bn in the civil budget 2021-22 and the government espoused$12.022 bn in first seven months. The government had espoused a aggregate of$14.3 bn in FY21.
With this, the total foreign debt from external sources ( other than Pakistanis) reached$47.55 bn in 43 months of the current government. The MEA data showed that the size of foreign loans had been steadily adding over the last three and half times from$10.59 bn in FY19 to$10.662 bn in FY20 and also reaching$14.28 bn in FY21 followed by$ 12bn in 7MFY22.
There were four major sources of foreign inrushes which included$3.329 bn of multinational lenders followed by$ 3bn of time deposit from Saudi Arabia, about$2.623 bn of marketable loans from private banks and$2.041 bn worth of transnational bonds. About$ 196 million also came from bilateral lenders and about$ 179m of subventions.
The report said the government entered$8.4 bn worth of inrushes for popular support about$1.1 bn of short term credit. This put the totalnon-productive (non-project) backing at$9.5 bn in seven months against full time target of$12.16 bn, which meant that about 80pc of total loans were acquired for canvas significances, budget backing and foreign exchange reserve make up.
About$1.68 bn were secured against colorful foreign funded systems and about$ 832m for publically guaranteed loans.
The data showed the government secured$2.04 bn through transnational bonds against a full time budget target of$3.5 bn. On top of that, the government also attained$2.623 bn marketable loans from transnational banks against a full time budget target of$4.87 bn. Of this, Dubai Bank was plant to be the financier of choice which handed further than$1.14 bn short- term loans out of$2.6 bn. This was followed by$ 591m from Emirates NBD,$ 487m from Standard Chartered London and$ 343m from Suisse AG, United Bank Limited and Allied Bank Limited put together.
The biggest disbursement among the multilaterals came from Asian Development Bank at$1.09 bn, followed by$1.086 bn from Islamic Development Bank and$ 847m from the World Bank.
The largest among the bilateral loans came from China at$ 100m followed by$ 45m from the United States. Total loans from bilateral lenders stood at$ 196m in 7MFY22.
The report sheds light on unfortunate slide towards the debt trap as the government had to calculate on short- term precious marketable loans amid incapability of the authorities concerned to insure sufficientnon-debt creating inrushes through advanced foreign direct investments and exports. The remittances which have been growing over the times amid trip bans following health epidemic also appeared to be floundering to maintain pace.
