Pakistan’s Foreign Commercial Borrowing Increasing At Rapid Pace

Aizbah KhanWeb Editor

20th Mar, 2021. 10:50 pm
Pakistan's Foreign Commercial Borrowing Increasing At Rapid Pace

Pakistan’s dependence on foreign commercial loans is increasing rapidly as Pakistan received $3.110 billion out of a total of $7.2 billion in external debt in the first eight months of the current financial year (July-February).

In addition, with the help of $1 billion deposited by China, the government has made possible the net transfer of dollar flows in the current financial year. With the help of foreign commercial loans and secured deposits, Pakistan has received a total of  $4.1 billion, which is more than 50% of the total external debt.

According to the Economic Affairs Division (EAD) data, the government received $7.208 billion in external debt from various sources in the fiscal year 2020-21, which is 59% of the annual budget estimate of  $12.233 billion for the entire fiscal year. Is. In the last fiscal year 2019-20, the external debt was $6.282 billion, which was about 51% of the total annual budget of .9 12.958 billion.

It is also important to note that China provided $1 billion to fill the fiscal gap created by the withdrawal of Saudi Arabia’s debt facilitation. This healthy flow of debt has led to improved foreign exchange reserves and exchange rate stability.

Multilateral partners, including the Asian Development Bank, have provided $1.210 billion, while the World Bank has provided $909 million, compared to the allocated budget of $2.257 billion. Bilateral sources, including France, the United States and China, provided $34.8 million, $76.6 million and $95.4 million, respectively.

The government claims in its official report that the flow of loans from lenders shows that they have confidence in the government’s policies and priorities, including financial and debt management, the energy sector and doing business. Ease policy included.

During the first seven months of the current fiscal year, the government repaid $4.124 billion in debt, compared to $10.363 billion for the full fiscal year. The net transfer is important in debt management.

An increase in external debt stocks is a sign of a positive balance, while a decrease in foreign debt stocks is a sign of a negative balance. However, it depends on the macroeconomic situation of any country.


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