ISLAMABAD - The PTI government has received about $12.022 billion foreign loans during the first seven months (July-January) of the current fiscal year, increasing the overall loan of the country.

Pakistan received about $12.022 billion inflows, including $11.843 billion in loans and about $179.08 million in grants. The government has borrowed more than 85 percent of the annual loans estimates in just seven months to maintain its foreign exchange reserves that are depleting due to loan repayment and financing of current account deficit. The government has a budgetary target to obtain about $14.1 billion foreign loans and grants during the current fiscal year. In January alone, Pakistan has taken foreign loan of $2.59 billion from multiple financing sources.

The total receipt of $12.022 billion constitutes $3.329 billion from multilateral, $196.17 million from bilateral, $2.623 billion from foreign commercial banks, and $2.041 billion from issuance of bonds and three billion dollars time deposit from Saudi Arabia.

According to a monthly report on foreign assistance released by the Ministry of Economic Affairs, Pakistan had borrowed $2.623 billion from foreign commercial banks during the first seven months of the current fiscal year. The breakup of commercial banks loans showed that country has taken $1.140 billion from Dubai Bank, $591.25 million from Emirates NBD, $487.26 million from SCB (London) including ($9.05 million in December), $61 million from Ajman Bank PJSC, and $343.50 million from Suisse AG, UBL and ABL. Among multilateral development partners, mainly the Asian Development Bank provided $1.092 billion, the World Bank disbursed $1.001 billion, the AIIB $38.77 million, and IDB (S-Term) $1.086 billion. China disbursed 100.8 million dollars in first half (July-January) of the current fiscal year, the USA $45.27 million, Korea $3.36 million, the UK $14.54 million, and Germany $12.25 million. The PTI government has taken total loan of about $46.202 billion since July 2018. Pakistan contracted $8.41 billion in FY2018-19, followed by $10.45 billion in FY2019-20, $15.32 billion n in FY2020-21 and $12.022 billion in first seven months of the FY2021-22.

The government is borrowing from external sources to maintain its foreign exchange reserves, which are declining due to repayment of previous loans and financing of current account deficit. According to the recent report of the International Monetary Fund (IMF), Pakistan’s eternal financing needs are projected at $30 billion for the current fiscal year 2021-22. The figure will further go up to $35.06 billion in the next fiscal year (2022-23). Total debt is estimated at 88.6 percent of GDP at end-June 2021 (4.6 percentage points lower than at end-FY2020), reversing the increase associated with the Covid-19 crisis and falling below end-FY2019 levels before the start of the EFF programme. The trajectory of debt is expected to continue to decline to 70.4 percent of GDP by end-FY2026, supported by a favorable interest rate-growth differential outlook, and fiscal adjustment efforts in the context of the EFF programme.