Another milestone has been achieved by Pakistan government. Our government has successfully acquired $2.5 billion in foreign loans during July to October. The reason borrowing this much loan was to foreign exchange reserves that are already dying.
Major contributors of the loan were commercial banks. $1.02 billion loans during the last four months were taken by commercial banks. $253 million loans from Citibank, $269 million from Credit Suisse-led consortium of banks for budgetary support and $500 million from the Industrial and Commercial Bank of China (ICBC).
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The estimated borrowing from commercial banks by the government for the whole fiscal year was $1 billion. In just four months the loan taken has exceeded the estimated amount. The foreign exchange reserves are under huge pressure as deficit increased by 122 percent to $5.013 billion in the first four months of the fiscal year when compared to last year when it was $2.259 billion.
As foreign currency inflow dried out, Pakistan foreign exchange saw a drop of $4.5 billion in the last one year. The foreign exchange reserves of SBP currently are $13.5 billion.
Also, the government is thinking to increase $3 billion by issuing Euro and Sukuk bonds in the global market. Foreign loans taken by the federal government in last four years are approximately $35 billion. The loans were taken to maintain federal reserves and repay the debt. $17 billion was used to repay old debt.
In the year 2017-18, $8.094 billion foreign assistance was taken. $7.692 billion were loans while $401.78 million were grants.
Major lenders for Pakistan are United Kingdom, China, and the USA in the first four months of the fiscal year 2017-2018.