Pakistan to borrow PKR 5.5 trillion from international lenders

Pakistan would borrow 5.5 trillion Pakistani rupees (PKR) from international lenders in the current fiscal year to maintain its foreign exchange reserves, repay previous borrowings and finance the current account deficit. Earlier, in the annual budget for 2022-2023, the Pakistani government projected that it would only borrow PKR 3.17 trillion from international sources. However, the budget did not include funding from the International Monetary Fund (IMF), Saudi Arabia and the SAFE China depot, Pakistani newspaper The Nation.

The projected international borrowing volume has now increased to PKR 5.5 trillion after incorporating funding from the aforementioned sources. This new loan will be 74% higher than the government’s previous estimates. After the revision, external resources of PKR 5.503 billion projected for 2022-23 are more than 200% higher than the PKR 2.7 trillion originally projected for 2021-22.

The current government is still struggling to come up with dollars and it also needs $41 billion in external funding over the next fiscal year, The Nation reported. The government is expected to repay the previous loan of $21 billion and the current account deficit has been projected at $12 billion and $8 billion more to boost foreign exchange reserves to $18 billion in the fiscal year. coming.

Therefore, the government has planned to borrow heavily in the current fiscal year. However, significant funding would require the revival of the IMF program, which would not only release about two billion dollars for Pakistan, but also pave the way for securing loans from other multilateral and bilateral sources.

Meanwhile, Pakistani business leaders have warned that the country is heading for social unrest and fear it is becoming unsafe for foreign investment due to back-to-back government policies that seek to discourage investors, according to Dawn. “We don’t have continuity of economic policies. There must be separate teams for economic issues and political issues so that the policies remain intact, otherwise it will continue to affect foreign and local investors,” he said. former Vice President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Saqib Fayaz Magoon, while reacting to the massive hike in the State Bank of Pakistan (SBP) policy rate by 7 .5% in September 2021 to 15% in less than 10 months, Dawn reported.

He explained that industrialists and foreign investors always rely on interest rates and exchange rates before investing. “If it changes so abruptly and too drastically, then foreign investors will start to evade Pakistan,” Magoon said as quoted by Dawn. to businessmen who stocked up on the basic documents of collection on short-term credit.

“Banks used to make payments solely on the basis of letters of credit payments. Pakistan records around $1 billion in payments under credit-based business due to the credibility of Pakistani businessmen and foreign suppliers,” he said. According to Dawn, Magoon, while expressing concern over the rising value of the dollar, said that foreign investors are watching this depreciation of the Pakistani rupee with concern because they are investing in dollars and getting a return in local currency, because the exchange rate is probable. appreciate even more after Eidul Azha, he said.

Notably, inflation in Pakistan rose to 21.32 percent in June, the highest in more than 13 years, according to local media. (ANI)

(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)

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