In the last month, 1.1 billion dollars has been granted to Pakistan as foreign commercial loans. Now the total borrowing amount has totalled up to $4.5 billion including half a billion-dollar lent by China in the current fiscal year.
Pakistan has to make a debt repayment to the United Arab Emirates (UAE) of about $2 billion in February and March. The latest borrowing meeting focused on the repayment of the current debt and keeping the foreign exchange reserves now at $13 billion.
The Ministry of economic affairs said that the increasing trend in the first five months (July-November) has been seen due to the overall disbursement. The borrowing was equal to 37% of the annual budget estimate of $12.4 billion for the fiscal year 2020-21. The external inflows have reached $4.5 billion as last year was only $3.1 billion 45% growth since last year.
They also added that the external inflows showed an excellent performance despite the challenges caused by the second wave of COVID-19 and the depressed global economic conditions.
Pakistan will pay back after getting new loans as no revenue will be generated by the current loans. Like $3.9 billion has been received on account of budget financing and balance of payments support. The official statistics show $1.1 billion in new foreign commercial loans in November.
ICBC (Industrial and Commercial Bank of China) disbursed $500 million, taking Beijing’s contribution to $1.52 billion in the current fiscal year. Chinese loans of $1.52 billion were equal to 34% of total loans received in the first five months of FY21.
The economic affairs ministry addressed that the first five months greatly helped the government discharge external public debt ($2.94 b), due to strong inflows. Adding that it further stabilized the exchange reserves.