The federal government is set to borrow a minimum of $23 billion in the next fiscal year, including a $12 billion rollover of bilateral debt, to finance its development plans and meet external financing requirements.
Of the $23 billion borrowing plan, $20 billion is detailed in the budget documents. The $3 billion rollover from the United Arab Emirates (UAE) is not included in the federal books as it is also intended for balance of payments support.
The breakdown shows that Pakistan will secure $19 billion in loans for budget financing and bolster its foreign exchange reserves.
The government has allocated $3.9 billion for foreign commercial loans in the new fiscal year, despite not acquiring new debt from foreign commercial banks. In the outgoing year, China rolled over $1 billion in commercial debt.
Budget documents indicate that borrowing of $23.2 billion (Rs5.9 trillion), excludes any loans from the International Monetary Fund (IMF). The IMF loan will specifically support the balance of payments.
The finance minister’s promise to float Panda bonds in the Chinese capital market has not been realized. For the next fiscal year, the government has budgeted $1 billion in Eurobonds after failing to float bonds this year.
The government has again included the rollover of $5 billion in cash deposits from Saudi Arabia, acknowledging the difficulty in repaying these funds, $3 billion of which were initially taken in 2019 for one year.
Saudi Arabia has not agreed to extend a $1 billion oil facility for the next fiscal year, leading the government to exclude it from external loan projections.
Similarly, no new loans from Saudi Arabia for petrol imports are included, although the kingdom provided $600 million for petrol imports this year.
China’s $4 billion in cash deposits is also set for rollover, with $2 billion maturing next month.
The UAE’s financing is not part of the federal borrowing plan since it is for balance of payments support and will be serviced by the central bank from its profits. Of the $3 billion from the UAE, $1 billion matures next month.
The government has also projected a new $500 million loan from the Islamic Development Bank and $465 million from Naya Pakistan Certificates.
Additionally, around $1.1 billion will be borrowed to finance the federal Public Sector Development Programme.
