The federal government received yet another infusion of foreign loans last month, this one amounting to $1.2 billion. This takes the incumbent government’s total borrowing over the course of the first half of the current fiscal year to $5.7 billion.
According to a report by The Express Tribune, the Ministry of Economic Affairs noted on Wednesday that during the July-December period of the fiscal year 2020-21, the Pakistan Tehreek-e-Insaf government received $5.7 billion in external loans from various financing sources.
The ministry observed that total inflows were 46% of the annual budget estimate of $12.2 billion for the current fiscal year. In December, the government received $1.2 billion in foreign loans, including $434 million from commercial banks, which are the most expensive loans.
The ministry added that out of the $5.7 billion, an amount of $2 billion, or 36% of the total loans, were on account of foreign commercial loans.
Nearly 87% of the foreign loans were for budget financing and building the foreign exchange reserves, which means that these have not been utilized for creating assets. Pakistan received about $5 billion for the purpose of budget financing and balance of payments support, which the country would be paying back after taking new loans as no revenue-generating assets were created by using those loans.
Meanwhile, project financing accounted for a mere $754 million, or 13% of the total loans. This should be a concerning statistic for the government, given how vital it is to continue pouring funds in developmental projects.
Pakistan received $434 million in new foreign commercial loans in December, showed the official statistics. Dubai Bank disbursed another $413.5 million, taking its lending to Pakistan to $815 million in the past six months.
Standard Chartered Bank London gave $20 million, taking its six-month lending to $220 million.
The Industrial and Commercial Bank of China (ICBC) disbursed $500 million in November, taking Beijing’s contribution to $1.52 billion in the current fiscal year.