Govt terms report regarding new loans as ‘inaccurate’

'Real addition in external public debt under PTI government was $1.3bn, not $10.4bn'

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The Finance Division has termed as inaccurate and misleading a news report appearing in a section of the press contending that the government’s foreign borrowing increased by $10.4 billion from 18th August 2018 to 30th September 2019.

In an official statement released on Thursday, the Finance Division contended that the report was not only misleading but was also against the national interest as it sent erroneous signals to the markets, which could have had potentially negative consequences for Pakistan’s rapidly stabilising economy.

Earlier, a media outlet had reported that the government “has admitted to obtaining a total of $10.37 billion loans from different countries and international lenders until September 30, 2019”.

According to the report, Economic Affairs Minister Hammad Azhar had told the National Assembly that the Pakistan Tehreek-e-Insadf (PTI) government secured $10.37 billion from various governments and international institutions from August 14, 2018, to September 30, 2019.

“It is critical to understand that the figure of $10.4 billion is ‘gross inflows’ and does not take into account the debt retirement of $9.1 billion during the same period,” the Finance Division stated on Thursday. “For the sake of clarity, it must be noted that reporting gross external debt inflows only presents one side of the picture, ignoring outflows on account of repayments, which are the other side of the picture, and a prerequisite to calculate the net or actual increase in external indebtedness of the country.”

The statement further noted that while gross external public debt disbursement was $10.4 billion during 18th August 2018 to 30th September 2019, deducting the $9.1 billion which the government paid back during the said period leaves a net figure of $1.3 billion. “Therefore, the real addition in external public debt under the present government was $1.3 billion, not $10.4 billion as claimed by a section of the press,” it added.

It is pertinent to mention that media report had claimed that the PTI government, since coming into power, had received $1.54 billion from China, $151.79 million from Saudi Arabia, $68.6 million from France, $0.4 million from Germany, $62.48 million from Japan and $0.01 million from Kuwait. “The government also obtained $991.2 million in loans from the International Monetary Fund (IMF) during the said period.”

As per the report, the government received a total $2.751 billion from multilaterals including $997.45 million from Asian Development Bank (ADB), $23 million from Asian Infrastructure Investment Bank (AIIB), $155.04 million from International Bank for Reconstruction and Development (IBRD), $556.05 million from International Development Association (IDA), $6.14 million form Islamic Development Bank (IDB), $922.84 million from IDB (short term), $42.24 million from International Fund for Agricultural Development (IFAD), $8.36 million from Organisation of Petroleum Exporting Countries (OPEC Fund), and $39.8 million form ECOT/BANK.

“The government obtained $4.805 billion loan from commercial banks including $365 million from Ajman Bank, $2.235 billion from Consortium of Chinese banks (ICBC, CDB, BOC), $150 million from Citibank, $410 million from DIB/Noor, $195 million from DIB, $500 million from Emirates NBD, $300 million from ICBD and $650 million from Credit Suisse.”

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