The government plans to obtain $8.1b worth of new foreign loans in the upcoming financial year 2017-18 for project and budget financing according to sources. As per new estimates, the governments actual foreign borrowings are expected to cross $11b which will be the highest ever in the country’s history. In the outgoing FY 2016-17, the government had budgeted $8b of foreign loans, but the forecast for the upcoming FY 2017-18 had to be revised.
According to sources, this additional $3b in foreign loans is a necessity in light of the mounting debt obligations and interest repayments that need to be met. This additional financing requirement will be met by fresh foreign loans of around $2b that will be provided by China in the outgoing financial year. Other sources of foreign loans will be commercial banks and from it a major source of funds will be provided by Chinese banks.
The government had originally forecast loans from foreign commercial banks to be worth $2b for FY 2016-17, but according to Ministry of Finance sources that as per revised estimates that the actual amount of loans ended up being taken may be worth $3.7b. $2.3b loans out of the total of $3.7b are actually coming from Chinese financial organizations.
The data reveals that $1.7b will be provided by China Development Bank of which $1b is expected to be disbursed in this month; $300m were provided by Industrial and Commercial Bank of China and $300m may be given by the Bank of China. Pakistan as per World Bank Policy based guarantees would get $700m of foreign commercial loans with another $300m may be asked for by the end of this month.