ISLAMABAD: Pakistan has to repay foreign loans worth $8.638 billion during the second half (December-June) of the fiscal year 2021-22.
According to the data, in rupee terms that amount for repayment of foreign loans has gone up by 399% during the last four years.
It stood at Rs286.6 billion in 2017-18 and now it is estimated around Rs1,427.5 billion. Meanwhile, in dollar terms, Pakistan had to repay foreign loans — both the principal and mark-up — to the tune of over $12.4 billion.
Keeping in view the ongoing situation of the external sector, if Pakistan fails to resume the International Monetary Fund (IMF) programme by the end of January or early February, then a full-fledged crisis will be knocking at the doors of the country already struggling economy by end of the current fiscal year.
Pakistan’s foreign currency reserves held by the State Bank of Pakistan (SBP) stood at $17.6 billion till December 31, 2021, despite inflows worth $3 billion from Saudi Arabia, over $2 billion from the IMF, $1 billion through International Eurobond in the first half (July-Dec) due to widening current account deficit (CAD).
According to the official data, the country paid around $3.78 billion on account of principal and mark-up on foreign loans during the first five months (July-Nov) of the ongoing fiscal year.
It is pertinent to mention here that if the IMF programme does not revive till the end of January or early February 2022, then it will become difficult for Pakistan to avoid depletion of foreign currency reserves held by the central bank.
For confirmation, questions were sent to the spokesperson of the Economic Affairs Division (EAD), who confirmed that Pakistan’s total foreign repayments amount to $12.3 billion during the current fiscal year, including principal and interest repayments.
‘Numbers depict a horrifying picture’
Shedding light on the issue of the increased external sector vulnerabilities, former finance minister Dr Hafiz said: “The situation has become difficult as the country’s external financing requirements climbed to at least $30 billion on a short-term basis.”
He further said that the numbers depict a “horrifying picture”. Pasha shared the example of Sri Lanka whereby the country’s foreign exchange reserves stood close to $1 billion but its debt obligations were over $7 to $8 billion.
Pasha elaborated that now Sri Lanka’s foreign minister in his statement, had refused to go to the IMF and indicated that they would approach China to help them to pay off their debt obligations and in return, they might hand over one of their ports to Beijing.
