Surviving By A Thread: Pakistan Took $5.6 Billion Loan To Keep Forex Reserves In Double Digits

Reeling under fiscal distress, Pakistan has taken around $5.6 billion worth foreign loans in the first nine months of the current fiscal year, reports The Express Tribune. This has reportedly helped the government in keeping the foreign currency reserves in double digits.

Out of the said amount, China lent around $3.8 billion, roughly two-thirds of the new debt. To keep the ever-shrinking foreign exchange (forex) reserves in double digits, Islamabad took $2.6 billion as commercial lending from Beijing last month. The China Development Bank gave around $2.54 billion, and Industrial Development Bank China disbursed $300 million.

As part of the project financing to the China-Pakistan Economic Corridor (CPEC), China provided around $1.3 billion. Such cumulative Chinese backing has made the US wary of the possibility of Pakistan using the International Monetary Fund (IMF) aid, if provided, to repay the debts of China, and hence it is concerned over the IMF bailout of Islamabad.

With more assistance from Saudi Arabia($3 billion) and United Arab Emirates ($2 billion), Pakistan’s total balance of payments, budgetary support and project financing stands at $12.6 billion as of July-March period of 2019 fiscal.

Despite all this, Pakistan’s current forex is hovering at a mere $10.2 billion. Pakistan is expecting an $8 billion bailout package from IMF.

As per the report, the current Tehreek-e-Insaf government of Pakistan has done an incognito borrowing of $7 billion that it is not showing on the central government’s books.