‘Pakistan Hopes to Obtain Record over $12b loans from Foreign Sources in Next Fiscal Year’
Forget about the criticism over obtaining loans from the foreign countries and international financial institutions, as The Express Tribune in a report on Sunday said Pakistan is eyeing obtaining record foreign loans of over $12 billion in the upcoming fiscal year on the strength of an International Monetary Fund (IMF) programme.
But it will still face a financing gap due to the requirement of building foreign currency reserves and $10.7 billion in debt repayments.
The country’s gross external financing requirement has been estimated at a minimum $19 billion, excluding the additional needs to shore up the foreign currency reserves to a level that are sufficient to finance three months of imports, said sources in the finance ministry.
The government has estimated a record $10.7 billion in debt repayments in fiscal year 2019-20 while another $8.3 billion will be needed to finance the current account deficit.
But the real challenge will be how to increase the central bank’s foreign currency reserves to close to $13 billion from the anticipated level of around $7 billion by the end of this month. The reserves currently stand at $8 billion, which are not sufficient to provide cushion for even two months of imports.
Pakistan and the IMF have announced a staff-level agreement for a $6-billion 39-month loan package, which will be supported by budgetary assistance from the World Bank and the Asian Development Bank. But all these inflows will be insufficient to provide comfort to the Q-block dwellers.
Out of the $6 billion, Pakistan will receive $2 billion from the IMF in the next fiscal year, subject to successful completion of quarterly reviews. Against $2 billion inflows, the government will return the IMF $750 million on account of repayment of previous loans, said the sources.
Similarly, the government still has a plan to borrow $2 billion from foreign commercial banks. But the new borrowings will not be sufficient to repay the $4.4-billion maturing commercial bank loans, the finance ministry sources said. Pakistan also plans to float $3 billion worth of Eurobonds in the next fiscal year as against $1.6 billion in repayments on account of Eurobonds, they added.