Pakistan foreign loans in 7 months equals $4.6 billions, Motorway pledged for $1 billion
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ISLAMABAD:
Pakistan's debt burden and the debt liabilities are sky rocketing with each passing day and government is facing extreme difficulties in managing the debt burden and the fiscal deficit both.
However the approach adopted to off set the foreign debt and the loans repayment is even disastrous.
New loans for payment of old loans and meeting the budget deficit through loans has severe adverse effects on economy, currency and inflation.
In order to offset declining foreign currency reserves and meet external debt obligations, Pakistan obtained fresh foreign loans worth $4.6 billion over the past seven months, including $1.9 billion from China alone.The foreign economic assistance stood at $4.57 billion between July and January of this fiscal year, according to the data compiled by the Ministry of Finance and Economic Affairs.
These included borrowings amounting to $2.3 billion for budgetary and balance of payments support – areas that do not offer return on investments and make it difficult to repay loans without resorting to additional borrowings.
The $2.3 billion borrowings include $1 billion in Sukuk Bonds, which were floated by pledging the Lahore-Islamabad Motorway and $1.2 billion from foreign commercial banks. Both these loans were aimed at meeting the needs of budget financing and foreign currency reserves.
The $4.6 billion foreign loans were about 57 per cent of the annual economic assistance of $8 billion that the government projected it would receive during the current fiscal year 2016-17.
