Since M2Ks and various assorted purchase plans for Pakistan have been bandied about, I feel that the following report on Pakistan’s borrowing in the last few years is very relevant. I request the admins to please allow this.
http://nation.com.pk/daily/may-2005/16/index5.php
Pakistan obtained $10b foreign loans
By Javed Mahmood
LAHORE – Pakistan has obtained about $10 billion worth foreign loans in last four and a half years, The Nation learnt on Sunday.
Besides the loans, the country raised $1.10 billion debt from the international financial markets by offering Euro and ‘Sukuk’ bonds in the last couple of years.
Data collected by The Nation revealed that Pakistan obtained $1.60 billion foreign loans in 2000-01, $2.316 billion in 2001-02, $1.55 billion in 2002-03, $1.242 billion in 2003-04 and $2 billion in July-December period of 2004-05.
Meanwhile, the government also introduced Euro bonds worth $500 million and Sukuk bonds amounting to $600 million in international market.
The inflow of foreign loans, obtained by Shaukat Aziz-led economic team, belie the government claims that it has forsaken begging bowl and reduced reliance on external borrowings. Contrarily, the Kashkol (Begging bowl) 😮 😉 has been extended to raise more and more foreign loans during the last few years.
The government in December last year returned last two tranches of Poverty Reduction and Growth Facility (PRGF) to the International Monetary Fund (IMF).
This exercise made the government to indulge in hollow sloganeering that dependence on foreign loans has been given up and that it is in a position to survive without foreign loans.
However, the federal government claims nosedived when it rushed to the World Bank and the Asian Development Bank to obtain more loans to support foreign exchange reserves, facing pressure due to widening trade imbalance, stabilise rupee against dollar and pay the rising import bill.
The Nation learnt that government officials held frequent meetings with the said two donor agencies, which enabled it to disburse about $2 billion in July to December this fiscal.
The huge disbursement of foreign loans in six months of this financial year seems a new record because, in the past, the annual disbursement never exceeded $2 billion mark.
Official sources say that in 2004-05, the total lending of the donors to Pakistan might exceed $3 billion as the WB and ADB have not only enhanced the size of lending, but also expedited the disbursements.
Interestingly, in July to December this fiscal the total foreign debt of Pakistan increased by $1.45 billion from $35.25 billion in 2003-04 to $36.70 billion, mainly due to federal government’s policy to obtain more and more loans.
The burden of foreign loans on Pakistan is expected to further increase in next three years as the World Bank and the Asian Development Bank have doubled the annual lending to Pakistan under the new three-year programme on the request of the federal government, sources maintained.
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