ISLAMABAD: Pakistan has obtained yet another foreign commercial loan of $500 million from the Industrial and Commercial Bank of China (ICBC), a move aimed at stopping official foreign currency reserves from slipping to dangerous levels.
With the fresh foreign loan that Islamabad contracted on October 11, total foreign commercial borrowings in the first four months of this fiscal year have crossed $1 billion, said sources in the Ministry of Finance.
The finance ministry had informed parliament in June this year that it would obtain $1 billion as commercial loans during 2017-18 that will end in June next year. However, it has already breached the limit with eight months remaining.
So far, Citibank has given $267 million and Credit Suisse AG loaned $255 million. Pakistan had signed a $450-million short-term foreign commercial loan contract with the Credit Suisse-led consortium in order to boost reserves and pay off a previous loan of Credit Suisse.
Citibank and ICBC are among half a dozen banks that Pakistan has engaged as joint lead managers to float Sukuk and Eurobonds. The road shows for the Sukuk and Eurobond began on Wednesday to raise $2 billion to $3 billion for propping up official foreign currency reserves.
The ICBC had also given $300 million commercial loan in the last fiscal year. The loans were obtained to stop the downward slide of the official foreign currency reserves that currently stand at $13.67 billion. The finance ministry was trying hard that the reserves do not slip below two-and-a-half-month import bill cover.