The $439 million in loans are exclusive of the $2-billion one-off Chinese injection meant to stabilise gross official foreign currency reserves held by the State Bank of Pakistan (SBP).
PHOTO:REUTERS
ISLAMABAD: International creditors have disbursed $439 million loans to Pakistan last month, an amount that still seems insufficient to meet the country’s growing external sector requirements.
About two-thirds of the total loans have been received from China against four projects, showed statistics compiled by the Ministry of Finance and Economic Affairs. The Chinese project financing is expected to slow down in the coming months due to completion of ongoing schemes.
The $439 million in loans are exclusive of the $2-billion one-off Chinese injection meant to stabilise gross official foreign currency reserves held by the State Bank of Pakistan (SBP). The loans have not been booked on the federal government’s books, according to the officials.
China disbursed $290 million in July. This amount includes $166 million for the Orange Line Metro Project, $95 million for the Sukkur-Multan section of China-Pakistan Economic Corridor’s (CPEC) eastern route, and $22 million for Havelian-Thakot road of CPEC. All these three schemes are near completion.
Yao Jing, the Ambassador of People’s Republic of China, met with Asad Umar, the Finance Minister, on Monday. The ambassador said that he looked forward to working closely with Pakistan with a view to further increase the economic cooperation between the two countries, an official handout of the finance ministry stated.
Pakistan expects continued Chinese financial assistance to deal with the current economic crisis, as reliance on the International Monetary Fund (IMF) may make things complicated for both Islamabad and Beijing, according to officials.
The minister expressed his desire to further enhance bilateral cooperation in various fields. Referring to CPEC, he said that the corridor will play an important role in taking Pakistan’s economy forward as well as cementing bilateral relationship. Umar assured the ambassador of his full support for CPEC, according to the finance ministry.
Pakistan also received $70 million worth of two commercial loans from Noor Bank PJSC and consortium-led by Suisse AG. Both of these loans have been obtained for one year at the floating London Interbank Offered Rates. Noor Bank disbursed $20 million in July out of total committed amount of $130 million.
Another $1 billion loan makes its way from China
The Suisse AG also disbursed $50 million out of its total commitment of $750 million. Both of these loans will mature within this fiscal year, increasing the refinancing risks for the country at a time when it is already facing pressure on its external sector.
Pakistan’s gross external financing needs are assessed at a minimum $26 to $28 billion, depending upon the projected current account deficit.
Pakistan booked $2.2 billion current account deficit in July, which was 16% higher than the already higher base. But authorities believe that the trend will reverse in the coming months, as July’s current account deficit widened due to clearance of some pending import dues.
Finance Minister Asad Umar remained busy in assessing the macroeconomic situation and held another meeting with senior officials on Monday.
Pakistan receives $9.2b in foreign loans, but reserves still plunge
The minister was reviewing all the available options to deal with the external sector crisis, the officials said.
The loan disbursements by multilateral creditors remained low in July, as the country received only $48 million from multilateral lenders. The Asian Development Bank (ADB) disbursed $23.3 million. The World Bank also released $23.1 million last month.
Pakistan receives less than projected loans from World Bank
The Economic Affairs Division (EAD) gave a detailed presentation to Umar and the main lenders of Pakistan. The briefing included financial progress of different foreign funded projects as well as certain aspects of potential projects to be included in the pipeline in future, stated the finance ministry.
Umar underlined the realistic assessment of required foreign assistance was an important function and the EAD should regularly update its assessment of various sectors in order to utilise the valuable resources in the most productive manner.
The finance minister also met with Nawaf Bin Said Al Malki, the Saudi Ambassador to Pakistan, and discussed bilateral economic cooperation.
Published in The Express Tribune, August 28th, 2018.
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