ISLAMABAD: As Pakistan economic conditions deteriorate and reserves andcurrency on a fall the government is mulling option of yet another hugeloan to stabilise the reserves.
The government is all set to secure commercial loan of $1 billion to $1.5billion from Chinese banks within the next two weeks to shore up thedepleting foreign currency reserves, senior officials said on Tuesday.
The country had already raised $1.77 billion short-term commercial loansfrom various foreign banks, mainly Chinese, against a target of $1 billionfor the current fiscal year of 2017/18.
With the upcoming transaction, total short-term debt might go close to $3billion mark.
“The planned short-term loan transactions would be meant for two to threeyears period and efforts would be made to keep the rates low,” the officialsaid.
The government deferred a plan to tap Eurobond after its rate went up inrecent weeks,” the official said.
Pakistan requires dollar inflows to manage its financing requirements inthe wake of yawning current account deficit. The current account deficit isprojected to go up to $16 billion in the current fiscal as it stood at$10.4 in the first seven months of the FY18.
“We have worked out that some non- debt inflows will pour in the remainingmonths of the outgoing fiscal year to check depletion of foreign currencyreserves,” the official said.
“We expect that the foreign direct investment will touch $3 billion mark asit had already poured to the tune of $1.6 billion in first seven months.”
The official said the private sector credit in dollars will also bringsizeable inflows.
“The remaining gap will be bridged through short-term commercial borrowingsfrom international banks,” he added.
“All requirements for obtaining loan in the range of $1 to $1.5 billionhave been accomplished and it is hoped that this transaction will be donewithin first two weeks of next month (April 2018).”
The country had already obtained $7.6 billion from multilateral andbilateral creditors in the current fiscal year but the foreign currencyreserves held by the State Bank of Pakistan (SBP) continued to decline andfell to $11.8 billion.
Pakistan requires an immediate injection of $6 billion to $8 billion tokeeping its foreign currency reserves afloat otherwise rapidly depletingreserves could deepen the crisis in coming months.
“The government has also planned amnesty scheme for nonresident Pakistanisto bring back at least $4 billion to $5 billion,” another finance ministryofficial said. “Whether it becomes successful in achieving the desiredobjective is yet to see.”