$28.03b foreign loans taken so far

| Mandviwalla criticises issuance of $1b Sukuk bonds

ISLAMABAD -  The PML-N government has taken massive loans of $28.03 billion from different countries and international institutions during its tenure of around three-and-a-half years (June 2013 to October 2016).

Pakistan took loans from International Monetary Fund (IMF), World Bank (WB), Asian Development Bank (ADB), Islamic Development Bank (IDB), and countries like China, United Kingdom. Finance Minister Ishaq Dar presented the details of loans in the National Assembly the other day.

The government informed the lower house of the parliament that net impact of the foreign loans is $9.7 billion. The country's foreign exchange reserves had currently touched the historic level of $23.6 billion wherein State Bank of Pakistan-held reserves are $18.5 billion and that of commercial banks $5.1 billion.

The country has taken $6.2 billion from the IMF since September 2013. Meanwhile, the government had paid back $7.54 billion to the Fund to discharge the liability of the standby agreement, emergency natural disaster assistance and extended credit facility agreed by previous governments. The government had also taken $1.81 billion from commercial banks for budgetary support and balance of payment.

The WB had given loan of $4.6 billion to Pakistan. The country took loans for energy, infrastructure, transport, communications infrastructure, water, health, environment, education, governance, power sector and agriculture. The ADB had released $2.5 billion loans for water, energy, infrastructure, power and social sectors. The IDB had disbursed an amount of $2.9 billion for Pakistan. The Bank had given loan for energy, import of crude oil, social sector, health and educations sectors.

Pakistan had also acquired loan of $2.96 billion from China for energy, infrastructure, transport, defence infrastructure and capacity building, relief and rehabilitations of victims of natural emergencies. In countries, the UK had provided loan of $964.9 million to Islamabad for health, education and social sectors.

France had given $52.89 million, Germany $129.99 million, Japan $470.23 million, Korea $12.84 million, Kuwait $79.65 million, Norway $1.98 million, Oman $9.9 million, Saudi Arabia $134.38 million and United States $403.52 million. Similarly International Fund for Agricultural Development released $24.62 million, OPEC Fund $44.13 million, Dubai Bank $60.2 million, E.C.O.T/Bank $65 million and EU had given $52.11 million to Pakistan.

The PML-N government is continuously issuing bonds for the last three-and-a-half years. It had issued Eurobonds and Sukuk worth over $4.5 billion so far. In the latest development in this regard, Pakistan has successfully issued one billion dollars Sukuk bonds in international market at interest rate of 5.5 percent. The government has floated the bonds to repay the debt borrowed by Pervez Musharraf government in 2007 at 6.75 percent interest rate.

The two major opposition parties including Pakistan Peoples Party (PPP) and Pakistan Tehreek-I-Insaf (PTI) have strongly condemned the government's decision of raising money from auctioning of bonds.

"Sukook Bonds will increase the foreign debt of Pakistan which is already at the disastrous level and Ministry of Finance is not giving the clear picture on foreign debt and not answering who will pay this loan," said Saleem Mandviwalla, a Senator of Pakistan People's Party and former finance minister. He criticized the issuance of $1 billion Sukook bonds in international Market, terming it wrong decision at wrong time. "The federal government has issued Sukook bonds at a time when international market was not favoring Pakistani bonds, investors sentiment was against Pakistan. It was expected that the rates would be high".

PTI has also rejected the government's decision of issuing Sukuk bond. “If as the government claims economy is booming with record reserves why are we taking this billion dollar foreign loan (Sukuk bond)," asked Asad Umar, PTI MNA. He said that government has built the reserves entirely on record loans. He criticized that government needs to have specific assets mortgaged like PTV and Radio Pakistan for issuing Sukuk transactions.


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