Running on rollovers: Pakistan’s reserves get  billion foreign loans from Saudi, China
0 3 min 49 sec


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 countryโ€™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.

Leave a Reply

Your email address will not be published. Required fields are marked *