Pakistan has planned to borrow a minimum of USD 23 billion in the next fiscal year, including the rollover of a bilateral debt of USD 12 billion, to finance its development plans and meet its external financing requirement which will keep the cash-strapped country’s foreign and economic policies dependent on global financial institutions like the IMF, according to a media report on Thursday.
Budget documents for fiscal year 2024-25 showed that Pakistan would borrow at least USD 23.2 billion, or Rs 5.9 trillion, which did not include any loan from the International Monetary Fund (IMF), The Express Tribune newspaper reported, adding that the International Monetary Fund’s loan will be for balance of payments support.
Out of the USD 23 billion, the government has included USD 20 billion in budget documents. It has not made the rollover of USD 3 billion by the United Arab Emirates (UAE) part of federal books as it is also meant for balance of payments support.
Details showed that Pakistan would take USD 19 billion in loans for budget financing and building its foreign exchange reserves. The amount appears colossal, which will keep the country’s foreign and economic policies dependent on the IMF, the World Bank, Saudi Arabia, China, the UAE and the Islamic Development Bank.
These nations and international creditors are now dictating their terms due to their unending dependency on them.
Prime Minister Shehbaz Sharif has claimed that he has received investment pledges of USD 15 billion from Saudi Arabia and the UAE but so far these promises have not translated into concrete agreements.
After being unable to acquire new debt from foreign commercial banks, the government has once again budgeted USD 3.9 billion worth of foreign commercial loans in the new fiscal year. However, in the outgoing year, China rolled over USD 1 billion of commercial debt.
There was hope that the international credit rating agencies would improve Pakistan’s junk rating under the USD 3 billion IMF’s standby arrangement. However, political and economic vulnerabilities prevented them from improving Pakistan’s standing.
Finance Minister Muhammad Aurangzeb said on Tuesday that the rating agencies were waiting for approval of the new Extended Fund Facility of the IMF.
In case of further delay in the improvement of the ratings, the government’s plan of raising USD 4.9 billion through Eurobond and foreign commercial loans would not materialise.
The government had estimated the receipt of USD 6 billion from sovereign bonds and foreign commercial loans in the current fiscal year. After such deals could not be clinched, the State Bank of Pakistan bought an equal amount from the Pakistani markets.
The government has once again included the rollover of USD 5 billion in cash deposits from Saudi Arabia. This shows that the country will not be able to return the money out of which USD 3 billion had been taken in 2019 for just one year.
However, Saudi Arabia has not agreed to extend the oil facility of USD 1 billion to the next fiscal year, prompting the government to exclude it from the projection of external loan receipts. Similarly, the government has not included any new loan from Saudi Arabia for the import of petrol.
China’s USD 4 billion in cash deposit has again been added to the rollover queue, of which USD 2 billion is maturing next month.
The UAE’s financing has not been added to the federal borrowing plan since the money has been given for the balance of payments support, which will be serviced by the central bank from its profits. Out of the USD 3 billion, USD 1 billion is maturing next month.
The government has also estimated a new loan of USD 500 million from the Islamic Development Bank and $465 million on account of Naya Pakistan Certificates. Around USD 1.1 billion will be borrowed to finance the federal Public Sector Development Programme, according to the paper.
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