According to newspaper reports, the government has obtained a short-term loan of $450million from a consortium of local and foreign banks to arrest the sliding foreign currency reserves which have depleted by $4.4 billion in one year. However, it is yet to ascertain the interest rate which the government will pay on the short-term facility. Reports suggest that the loan agreement is the third of its kind which Pakistan has signed with Credit Suisse during the last five months, showing a bitter fact that the government’s dependence on foreign financing is growing. Earlier, the government had signed two loan agreements of $650 million with the same agency. With the third loan agreement, the volume of Pakistan’s total commercial loans has increased to $703 million not in three years but in three months. The chief of army staff has already expressed concern over the burden of sky-high debts on the nation and it is yet to be seen to which way the government policymakers are leading the country. The move also puts a question mark on the ability of the government to achieve financial stability. The regular channels of inflow of money from abroad are drying up and probably the government has only one choice and that is to get fresh loans.
The independent economists and financial experts have also expressed concern over the growing vulnerabilities of the country’s economy.With injection of $450 million fresh loan, foreign exchange reserves of the State Bank of Pakistan have increased to $14.158 billion. This is the level of financial management which has been pushing the country to the point of no return. The exports have been falling and remittances sent by Pakistani expatriates are also dwindling, putting burden on the foreign currency reserves, which considerably dropped during the last one year.The dirty international politics is pushing the country toward another war on terror and security challenges are growing with increasing incidents of terrorism across the country. The accumulation of foreign commercial loans has also increased the external debt servicing during the last three years. The country requires $5.8 billion for debt servicing during the current fiscal year which includes $4.5 billion for principal and $1.3 billion for interest repayments. The economists believe the solution to the problem is in the business and not in taking more loans to pay the interest.The PML-N government has so far obtained $35 billion in its four-year tenure to repay the debts and keep the foreign exchange reserves at certain level to claim that the country’s economy is stable.
