Cash-strapped Pakistan has received USD 49 billion as foreign loans during the last 10 years, over one-third of which were utilised for budgetary support instead of creating physical assets, raising questions of its debt sustainability, media report said today.
On average, the country received close to USD 5 billion in fresh loans every year and returned about USD 2.5 billion to its international creditors, adding the remaining amount to its debt stock.
Repayment amounts for the last couple of years have been increasing due to the USD 7.7-billion loan Islamabad obtained from the International Monetary Fund (IMF) in 2008, the Express Tribune reported.
Out of the USD 49.2 billion debt that international creditors gave to Pakistan from 2005 to June 2015, Economic Affairs Division (EAD) Secretary Saleem Sethi shared details of USD 30.7 billion with the Senate Standing Committee on Finance, Revenue and Economic Affairs. These loans were signed by the EAD.
In addition, State Bank of Pakistan signed two separate loans with the IMF, first in 2008 and the second in 2013, totalling USD 14 billion.
The total volume of the 2008 loan was USD 11 billion but disbursement stood at USD 7.7 billion. The size of the second IMF package is currently USD 6.2 billion and out of that, USD 4.2 billion has already been disbursed.
The Ministry of Finance raised another USD 4.6 billion by floating international bonds from 2005 through 2015.
After the IMF, the World Bank remained the largest lender that provided USD 9.2 billion in loans, followed by the Asian Development Bank that gave USD 8.4 billion and the Islamic Development Bank provided roughly USD 5 billion.
Bilateral lending during the last ten years stood at USD 7.9 billion.
China remained the single largest bilateral lender that gave USD 5.3 billion loans, followed by Japan that extended USD 1.1 billion loans. Saudi Arabia gave USD 979 million, on average USD 100 million a year.
The Standing Committee's Chairman Senator Saleem Mandviwalla expressed concern over the phenomenal growth in external borrowings.
The parliamentarians were also alarmed over the increasing borrowings for budgetary support and governance reforms, the daily said.
Of USD 30.7 billion, an amount of USD 11.3 billion was obtained for budgetary support during the last 10 years. In addition, successive governments issued USD 4.6 billion international bonds to raise funds for budget financing and the IMF approved USD 1.2 billion under this head.
The total budgetary support during last 10 years amounted to USD 17 billion.
Public debt management remains a matter of concern for the IMF that has been pushing the government to reorganise the Debt Policy Coordination Office.
Independent economists are opposed to the idea of borrowing in dollars for financing the budget. They argue that foreign loans should only be obtained for creating assets.
