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Running on rollovers: Pakistan’s reserves get $27 billion foreign loans from Saudi, China


Running on rollovers: Pakistan's reserves get $27 billion foreign loans from Saudi, China

Pakistan continued to lean towards foreign funding in the last fiscal year, with total inflows touching around $27 billion. Saudi Arabia and China continued to roll over billions of dollars in loans, according to a provisional report by the ministry of economic affairs. In the previous fiscal year, the country had borrowed approximately $26 billion, as it continued to rely on external borrowing to support its economy.The report showed that around $16 billion came through fresh borrowing, while the rest included rollovers, grants, commercial financing and investment instruments. It further stated that Pakistan secured $9 billion in rollovers from its two closest allies during the year. Saudi Arabia rolled over $5 billion in deposits, while China extended rollover support of $4 billion.Saudi Arabia also provided a fresh $3 billion deposit and agreed to extend its existing $5 billion facility for another three years.Earlier this week, Finance Minister Muhammad Aurangzeb said Pakistan had officially secured the rollover of the $3 billion deposit alongside the original $5 billion with the State Bank of Pakistan.According to the report, Saudi Arabia currently has $8 billion in cash deposits with Pakistan’s central bank, carrying interest of between 4% and 4.5%. China has placed $4 billion in cash deposits at an interest rate of more than 6%.Pak government stated that the bulk of the foreign assistance was directed towards budget financing, repayment of external debt and strengthening foreign exchange reserves.Of the $27.2 billion in total inflows recorded during the fiscal year, $24 billion went towards these purposes. Only $3.4 billion, or nearly 13%, was used for project financing.The report also showed that Pakistan received $2.2 billion from the International Monetary Fund (IMF) during the fiscal year.Pakistan’s foreign exchange reserves came under pressure earlier this year after the country repaid $3.45 billion in deposits to the United Arab Emirates in late April.By the end of June, gross foreign exchange reserves held by the State Bank stood at $18.5 billion. The report said these reserves were largely supported through rollovers, refinancing of existing loans and purchases of dollars from the market.Separately, on Tuesday, the country’s finance minister Aurangzeb requested US treasury secretary Scott Bessent for a $10 billion Exchange Stabilisation Support Facility to help strengthen Pakistan’s economy.The latest borrowing figures come as Pakistan’s exports declined by 6% in the last fiscal year compared with the previous year, according to data released by the Pakistan Bureau of Statistics last week.



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