Pakistan To Make Massive External Borrowings

Web Desk — In order to meet the tough economic challenges ahead, Pakistan would borrow around Rs5.5 trillion from international lenders in the current fiscal year. With this amount, Pakistan will maintain its foreign exchange reserves, repay previous loans, and finance of current account deficit.

However, in the annual budget 2022-23, the government had projected to borrow only Rs3.17 trillion from international sources in the ongoing financial year. However, the budget documents lacked financing from the International Monetary Fund (IMF), Saudi Arabia, and SAFE China deposit. The volume of the projected international borrowing has now reached Rs5.5 trillion after incorporating funding from aforesaid sources.

The borrowing would be 74 percent higher than the previous estimates of the government. After the revision, the external resources of Rs5.503 trillion projected for 2022-23 are greater by more than 200 percent than the initial Rs2.7 trillion budgeted for 2021-22.

The incumbent government, which is struggling to arrange dollars, would need external financing of $41 billion in the next fiscal year. The government would have to repay the previous loan of $21 billion and the current account deficit has been projected at $12 billion and $8 billion more for increasing foreign exchange reserves to $18 billion in the upcoming financial year.

Therefore, the government has planned to make massive borrowings in the current fiscal year. However, major financing would require the revival of the IMF programme, which would not only release around two billion dollars for Pakistan but would also pave the way for getting loans from other multilateral and bilateral sources.