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Pakistan gets foreign loans worth $2.2b in two months

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Pakistan gets foreign loans worth $2.2b in two months
Our Correspondent | September 25, 2020

942514-dollar-1440179381-400x230.JPG

Under an understanding with the IMF, Pakistan has included all Chinese loans, including guaranteed and non-guaranteed, in public debt. PHOTO: REUTERS

ISLAMABAD: Pakistan received $2.2 billion in gross foreign loans in first two months of the current fiscal year, up by nearly 36%, as the share of project financing shrank to a mere 6% of new loans, highlighting the country’s indebtedness.

During the July-August period of fiscal year 2020-21, the government received $2.25 billion in total external inflows from multiple financing sources, said the Ministry of Economic Affairs on Thursday.

The $2.2 billion borrowing was 18% of the annual budget estimate of $12.2 billion for fiscal year 2020-21, it added.

In the same period of last fiscal year, Pakistan had received $1.7 billion, indicating a 35.5% increase in external borrowing during July-August of current fiscal year.

The government has also officially booked $1 billion of Chinese loan as part of public debt, which it had obtained in July to return a Saudi loan. The “$1 billion is received in terms of time safe deposit”, according to the ministry.

Under an understanding with the International Monetary Fund (IMF), Pakistan had included all Chinese loans, including guaranteed and non-guaranteed, in public debt due to “non-transparency” concerns raised by the United States.

Out of the $2.2 billion, the project financing - the money received to create assets - amounted to only $138 million or 6% of the borrowing, according to the economic affairs ministry.

The rest of the amount was on account of budget financing and balance of payments support, which the country will be paying back after taking new loans as no revenue-generating assets were created by using these loans.

The economic affairs ministry said $961 million or 44% was obtained in budgetary support assistance to restructure Pakistan’s economy, $149 million as foreign commercial borrowing to repay maturing international Sukuk and other foreign commercial loans and $138 million as project assistance to finance its development project activities for improving socio-economic development in the country and for asset creation.

The $1 billion Chinese loan was also for balance of payments support.

Bilateral and multilateral development partners disbursed $1.1 billion in foreign economic assistance against the budgetary allocation of $5.8 billion for fiscal year 2020-21 on concessional terms with longer maturity, according to the ministry.

Amongst the multilateral development partners, the Asian Development Bank (ADB) provided $259 million. The World Bank disbursed $531 million against the budgetary allocation of $2.3 billion. From bilateral sources, France gave $23.7 million in loan, the US $24 million and the UK gave $7 million.

The Asian Infrastructure Investment Bank provided $250 million in budgetary support.

The ADB provided $148 million for coronavirus-related emergency assistance and the country also received $35 million in fresh loan from Ajman Bank.

Saudi Arabia did not disburse any amount against the annual oil facility of $3.2 billion on deferred payments, showed official statistics. The facility has remained non-operational since May 2020.

The economic affairs ministry said that in July 2020 total servicing of external public debt was $484 million against the annual repayment estimate of $10.4 billion for the current fiscal year. This included $99 million in interest payments.

In 2020-21, the government settled $51 million worth of foreign commercial loans. Similarly, the government repaid $331 million to multilateral and $102 million to bilateral development partners.

Considering the foreign exchange constraints, the financing of development projects and repayment of a huge external public debt compel the government to further borrow from multiple sources, the economic affairs ministry conceded.

It said around 65% of the total external public debt repaid in July 2020 constituted the repayment of some of the foreign commercial loans and international Sukuk, which were obtained and issued by the previous government. The August repayment figures will be released next month.

The total public debt, which was Rs24.95 trillion during the PML-N tenure, jumped to Rs36.3 trillion in the first two years of the PTI government. The PTI government has added Rs11.3 trillion to the public debt in two years, which is more than Rs10.7 trillion added by the PML-N in five years.

 
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Pakistan gets foreign loans worth $2.2b in two months
Our Correspondent | September 25, 2020

942514-dollar-1440179381-400x230.JPG

Under an understanding with the IMF, Pakistan has included all Chinese loans, including guaranteed and non-guaranteed, in public debt. PHOTO: REUTERS

ISLAMABAD: Pakistan received $2.2 billion in gross foreign loans in first two months of the current fiscal year, up by nearly 36%, as the share of project financing shrank to a mere 6% of new loans, highlighting the country’s indebtedness.

During the July-August period of fiscal year 2020-21, the government received $2.25 billion in total external inflows from multiple financing sources, said the Ministry of Economic Affairs on Thursday.

The $2.2 billion borrowing was 18% of the annual budget estimate of $12.2 billion for fiscal year 2020-21, it added.

In the same period of last fiscal year, Pakistan had received $1.7 billion, indicating a 35.5% increase in external borrowing during July-August of current fiscal year.

The government has also officially booked $1 billion of Chinese loan as part of public debt, which it had obtained in July to return a Saudi loan. The “$1 billion is received in terms of time safe deposit”, according to the ministry.

Under an understanding with the International Monetary Fund (IMF), Pakistan had included all Chinese loans, including guaranteed and non-guaranteed, in public debt due to “non-transparency” concerns raised by the United States.

Out of the $2.2 billion, the project financing - the money received to create assets - amounted to only $138 million or 6% of the borrowing, according to the economic affairs ministry.

The rest of the amount was on account of budget financing and balance of payments support, which the country will be paying back after taking new loans as no revenue-generating assets were created by using these loans.

The economic affairs ministry said $961 million or 44% was obtained in budgetary support assistance to restructure Pakistan’s economy, $149 million as foreign commercial borrowing to repay maturing international Sukuk and other foreign commercial loans and $138 million as project assistance to finance its development project activities for improving socio-economic development in the country and for asset creation.

The $1 billion Chinese loan was also for balance of payments support.

Bilateral and multilateral development partners disbursed $1.1 billion in foreign economic assistance against the budgetary allocation of $5.8 billion for fiscal year 2020-21 on concessional terms with longer maturity, according to the ministry.

Amongst the multilateral development partners, the Asian Development Bank (ADB) provided $259 million. The World Bank disbursed $531 million against the budgetary allocation of $2.3 billion. From bilateral sources, France gave $23.7 million in loan, the US $24 million and the UK gave $7 million.

The Asian Infrastructure Investment Bank provided $250 million in budgetary support.

The ADB provided $148 million for coronavirus-related emergency assistance and the country also received $35 million in fresh loan from Ajman Bank.

Saudi Arabia did not disburse any amount against the annual oil facility of $3.2 billion on deferred payments, showed official statistics. The facility has remained non-operational since May 2020.

The economic affairs ministry said that in July 2020 total servicing of external public debt was $484 million against the annual repayment estimate of $10.4 billion for the current fiscal year. This included $99 million in interest payments.

In 2020-21, the government settled $51 million worth of foreign commercial loans. Similarly, the government repaid $331 million to multilateral and $102 million to bilateral development partners.

Considering the foreign exchange constraints, the financing of development projects and repayment of a huge external public debt compel the government to further borrow from multiple sources, the economic affairs ministry conceded.

It said around 65% of the total external public debt repaid in July 2020 constituted the repayment of some of the foreign commercial loans and international Sukuk, which were obtained and issued by the previous government. The August repayment figures will be released next month.

The total public debt, which was Rs24.95 trillion during the PML-N tenure, jumped to Rs36.3 trillion in the first two years of the PTI government. The PTI government has added Rs11.3 trillion to the public debt in two years, which is more than Rs10.7 trillion added by the PML-N in five years.


Hilarious :rolleyes:!

How long this “borrow from paul to pay peter” strategy going to last?
 
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I think this is incomplete picture as net financing is the actual criteria. Out of this 2.3 billion 1 billion was used for repayment of saudi loan andother 400 million was used for repayment of loan in june. Actual picture can be seen when aug repayment figures will be issued.

Im any case these external loans should be minimized specially after significant reduction in CAD. Budgetory support should ideally be covered from local lenders rather than international loans.

Next quarter is really important as movement of CAD will determine the future economic trend of Pakistan.

May Allah help us.
 
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Pakistan gets foreign loans worth $2.2b in two months
Our Correspondent | September 25, 2020

942514-dollar-1440179381-400x230.JPG

Under an understanding with the IMF, Pakistan has included all Chinese loans, including guaranteed and non-guaranteed, in public debt. PHOTO: REUTERS

ISLAMABAD: Pakistan received $2.2 billion in gross foreign loans in first two months of the current fiscal year, up by nearly 36%, as the share of project financing shrank to a mere 6% of new loans, highlighting the country’s indebtedness.

During the July-August period of fiscal year 2020-21, the government received $2.25 billion in total external inflows from multiple financing sources, said the Ministry of Economic Affairs on Thursday.

The $2.2 billion borrowing was 18% of the annual budget estimate of $12.2 billion for fiscal year 2020-21, it added.

In the same period of last fiscal year, Pakistan had received $1.7 billion, indicating a 35.5% increase in external borrowing during July-August of current fiscal year.

The government has also officially booked $1 billion of Chinese loan as part of public debt, which it had obtained in July to return a Saudi loan. The “$1 billion is received in terms of time safe deposit”, according to the ministry.

Under an understanding with the International Monetary Fund (IMF), Pakistan had included all Chinese loans, including guaranteed and non-guaranteed, in public debt due to “non-transparency” concerns raised by the United States.

Out of the $2.2 billion, the project financing - the money received to create assets - amounted to only $138 million or 6% of the borrowing, according to the economic affairs ministry.

The rest of the amount was on account of budget financing and balance of payments support, which the country will be paying back after taking new loans as no revenue-generating assets were created by using these loans.

The economic affairs ministry said $961 million or 44% was obtained in budgetary support assistance to restructure Pakistan’s economy, $149 million as foreign commercial borrowing to repay maturing international Sukuk and other foreign commercial loans and $138 million as project assistance to finance its development project activities for improving socio-economic development in the country and for asset creation.

The $1 billion Chinese loan was also for balance of payments support.

Bilateral and multilateral development partners disbursed $1.1 billion in foreign economic assistance against the budgetary allocation of $5.8 billion for fiscal year 2020-21 on concessional terms with longer maturity, according to the ministry.

Amongst the multilateral development partners, the Asian Development Bank (ADB) provided $259 million. The World Bank disbursed $531 million against the budgetary allocation of $2.3 billion. From bilateral sources, France gave $23.7 million in loan, the US $24 million and the UK gave $7 million.

The Asian Infrastructure Investment Bank provided $250 million in budgetary support.

The ADB provided $148 million for coronavirus-related emergency assistance and the country also received $35 million in fresh loan from Ajman Bank.

Saudi Arabia did not disburse any amount against the annual oil facility of $3.2 billion on deferred payments, showed official statistics. The facility has remained non-operational since May 2020.

The economic affairs ministry said that in July 2020 total servicing of external public debt was $484 million against the annual repayment estimate of $10.4 billion for the current fiscal year. This included $99 million in interest payments.

In 2020-21, the government settled $51 million worth of foreign commercial loans. Similarly, the government repaid $331 million to multilateral and $102 million to bilateral development partners.

Considering the foreign exchange constraints, the financing of development projects and repayment of a huge external public debt compel the government to further borrow from multiple sources, the economic affairs ministry conceded.

It said around 65% of the total external public debt repaid in July 2020 constituted the repayment of some of the foreign commercial loans and international Sukuk, which were obtained and issued by the previous government. The August repayment figures will be released next month.

The total public debt, which was Rs24.95 trillion during the PML-N tenure, jumped to Rs36.3 trillion in the first two years of the PTI government. The PTI government has added Rs11.3 trillion to the public debt in two years, which is more than Rs10.7 trillion added by the PML-N in five years.


It is a very simple equation. We are dependant on external financing for roll over of principal payment, interest payment and financing CAD (by the term CAD here I mean, imports-exports and remittances. CAD in general means net inflows and outflows)

WITH THE MEASURES TAKEN TO CURTAIL CAD ,MOST OF OUR NET INCREASE IN FOREIGN LOANS FROM NOW ON WILL BE INTEREST PAYMENT + EXTERNALLY FINANCED PROJECTS.

You talked about 11.3 trillion increase in public debt. The answer is in the line you yourself highlighted. PLMN never included CPEC loan on paper to give you a rosy picture. This 11.3 trillion figure also includes CPEC loan since it's inception, which has now been included on paper to make our financial standing more transparent. 'Under an understanding with the International Monetary Fund (IMF), Pakistan had included all Chinese loans, including guaranteed and non-guaranteed, in public debt due to “non-transparency” concerns raised by the United States.'

IT IS VERY IMPORTANT TO KNOW THAT CPEC LOAN REPAYMENTS WILL START FROM THIS FY ONWARDS, THE ANNUAL QUOTED SUM IS 3 BILLION. PLMN never repaid a single dime of CPEC loan and enjoyed the grace period, and also kept it off the books (which is financial manipulation which it is famous for).
 
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It is a very simple equation. We are dependant on external financing for roll over of principal payment and interest (interest payment is something which shows up as our net increase in foreign loan, other factor which contributes to net increase is financing CAD). This figure also includes projects financed by external sources such as ADB or WB.

WITH THE MEASURES TAKEN TO CURTAIL CAD , OUR NET INCREASE IN FOREIGN LOANS FROM NOW ON WILL BE INTEREST PAYMENT + EXTERNALLY FINANCED PROJECTS.

You talked about 11.3 trillion increase in public debt. The answer is in the line you yourself highlighted. PLMN never included CPEC loan on paper to give you a rosy picture. Majority of this 11.3 trillion is CPEC loan since it's inception, which has now been included on paper to make our financial standing more transparent.

IT IS VERY IMPORTANT TO KNOW THAT CPEC LOAN REPAYMENTS WILL START FROM 2020 ONWARDS, THE ANNUAL QUOTED SUM IS 3 BILLION. PLMN never repaid a single dime of CPEC loan and enjoyed the grace period, and also kept it off the books (which is financial manipulation which it is famous for).

The PTI Government can always cancel further CPEC projects if it feels it'll be too much financial burden on Pakistan.

No one is forcing Pakistan to accept CPEC.
 
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The PTI Government can always cancel further CPEC projects if it feels it'll be too much financial burden on Pakistan.

No one is forcing Pakistan to accept CPEC.

Bro why would anyone cancel CPEC, the problem lies in financial feasibility of projects under CPEC which was the major problem under PLMN, their is no harm in going for projects that can generate enough revenue to pay off the loan (e.g. dams).
 
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The PTI Government can always cancel further CPEC projects if it feels it'll be too much financial burden on Pakistan.

No one is forcing Pakistan to accept CPEC.
is the new tooi party policy to talk s#it against CPEC? like the enemies of Pakistan do! after trying hard to sell that it was tooi parties maujza!
 
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I remember seeing a clip of PMIK which went viral when he sought loan after getting elected.

The clip was about his election campaign where he was heard saying: "How long will Pakistan beg? Dont we have any gairat left? I will not borrow if elected" (Something like that, I don't remember exact words).

Before him, I had seen few instances of such u-turns by Indian politicians.
 
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Bro why would anyone cancel CPEC, the problem lies in financial feasibility of projects under CPEC which was the major problem under PLMN, their is no harm in going for projects that can generate enough revenue to pay off the loan (e.g. dams).

Brother, the PTI Government already froze CPEC project for a full one year for these feasibility reasons and then re-started it doubling down by establishing the CPEC Authority and pretty much handing it over to the military.

Now, what did the PTI Government actually find during that one year pause when they re-evaluated everything. Nothing.

But I can tell you one thing (which is what upsets me personally in respect to the PTI Government) is that China launched the CPEC project with $45 billion with the PML-N Government in 2015. The Chinese were impressed with the Pakistani co-operation to the extent that they enhanced it to $62 billion in 2017. The Chinese were next planning with the PLM-N Government to enhance the project further to $150 billion by 2025.

But what has happened? PTI Government came, made it look as though CPEC is a disaster, mired in corruption and put the project on hold for a full year.

Around $30 billion of projects were completed during the PML-N's tenure (2015-2018). The Chinese are no longer talking with Pakistan about investing $150 billion. They're not even talking about $62 billion. In fact, they're reluctantly just trying to finish the original $46 billion just because CPEC Authority has been setup.

Now brother, you as a patriotic Pakistani not looking at this from a political party point of view, just look at it from a Pakistani Government point of view. Why Pakistan's largest ever infrastructure project that was launched with $46 billion, enhanced to $62 billion, planned to become a $150 billion just by 2025, stopped at $30 billion and seems to be only heading as far as the initial $46 billion project.

Why has this regression happened? Who's to blame for it? Do you think China wants Pakistani military owning their CPEC which they deliberately chose to do with a specific civilian Government?
 
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Brother, the PTI Government already froze CPEC project for a full one year for these feasibility reasons and then re-started it doubling down by establishing the CPEC Authority and pretty much handing it over to the military.

Now, what did the PTI Government actually find during that one year pause when they re-evaluated everything. Nothing.

But I can tell you one thing (which is what upsets me personally in respect to the PTI Government) is that China launched the CPEC project with $45 billion with the PML-N Government in 2015. The Chinese were impressed with the Pakistani co-operation to the extent that they enhanced it to $62 billion in 2017. The Chinese were next planning with the PLM-N Government to enhance the project further to $150 billion by 2025.

But what has happened? PTI Government came, made it look as though CPEC is a disaster, mired in corruption and put the project on hold for a full year.

Around $30 billion of projects were completed during the PML-N's tenure (2015-2018). The Chinese are no longer talking with Pakistan about investing $150 billion. They're not even talking about $62 billion. In fact, they're reluctantly just trying to finish the original $46 billion just because CPEC Authority has been setup.

Now brother, you as a patriotic Pakistani not looking at this from a political party point of view, just look at it from a Pakistani Government point of view. Why Pakistan's largest ever infrastructure project that was launched with $46 billion, enhanced to $62 billion, planned to become a $150 billion just by 2025, stopped at $30 billion and seems to be only heading as far as the initial $46 billion project.

Why has this regression happened? Who's to blame for it? Do you think China wants Pakistani military owning their CPEC which they deliberately chose to do with a specific civilian Government?

Chinese are our friends but businessmen as well, they look after their own financial interests first. The problem is bro you are not looking CPEC from a financial perspective in respect to Pakistan. What PLMN did was used CPEC for personal financial and political gain, the contracts signed were not in favour of common people.

Bro who are you kidding. 30 billion in Plmn term :D
This is the actual figure by Jan 2020.
'The Pakistani government told the country's parliament on Thursday that 13 projects worth $11 billion have been completed under the $60 billion China-Pakistan Economic Corridor (CPEC) project.'




I have mentioned multiple times before that PTI government never backtracked on CPEC, but they indeed shelved the financially non viable projects in favour of more viable ones. They completely changed the dynamics of CPEC now to projects like dams (hydro power generation), local fuel power plants like thar coal, SEZ's, more crucial western alignment and central alignment. ML-1, Investment in agriculture etc etc.
They completely cancelled all the proposed imported fuel plants, and all other non essential projects.
They have not signed a single project that does not make financial sense like Lahore metro.
They have negotiated contracts at considerably cheaper prices, be it solar or hydro.


This is the example of policy change.
 
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... The problem is bro you are not looking CPEC from a financial perspective in respect to Pakistan. What PLMN did was used CPEC for personal financial and political gain, the contracts signed were not in favour of common people. ...

This is where I've argued with PTI supporters and I don't know why it's being either misunderstood by them or whether it's being ignored out of ego.

It is Chinese money, in Chinese hands and the Chinese are managing it. Pakistani Governments have little or no control over the finances of CPEC until they are completed and eventually passed over to Pakistan. So where exactly are the financial accusations coming from?

As for political gains, China has preferred the PML-N Government over others due to its compliance with the Chinese, such as blocking out competition to Chinese bidding contracts. You can say that's wrong but that's that.

You can say it should be this project over that one to help the common man but it's Chinese money and they decide which projects gets priority.

No one is stopping Pakistan from getting additional loans from elsewhere to launch whatever projects that fall outside of CPEC which maybe considered more beneficial to the common man.

... Bro who are you kidding. 30 billion in Plmn term :D
This is the actual figure by Jan 2020.
'The Pakistani government told the country's parliament on Thursday that 13 projects worth $11 billion have been completed under the $60 billion China-Pakistan Economic Corridor (CPEC) project.'

...

Brother, what you're quoting are those $11 billion worth of CPEC projects completed during the PTI's tenure only.

And I stand corrected, it's not $30 billion but $28 billion worth of 22 projects completed during PML-N's tenure as of October 2018.

CPEC projects worth $28bln completed in 4 years

Let's just agree to disagree brother because you're not looking at it from a Chinese or a Pakistani strategic point of view nor you're looking at it from a Government to Government point of view.
 
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This is where I've argued with PTI supporters and I don't know why it's being either misunderstood by them or whether it's being ignored out of ego.

It is Chinese money, in Chinese hands and the Chinese are managing it. Pakistani Governments have little or no control over the finances of CPEC until they are completed and eventually passed over to Pakistan. So where exactly are the financials accusations coming from?

As for political gains, China has preferred the PML-N Government over others due to its compliance with the Chinese, such as blocking out competition to Chinese bidding contracts. You can that's wrong but that's that.

You can say it should be this project over that one to help the common man but it's Chinese money and they decide which projects gets priority.

No one is stopping Pakistan from getting additional loans from elsewhere to launch whatever projects that fall outside of CPEC which maybe considered more beneficial to the common man.



Brother, what you're quoting are those $11 billion worth of CPEC projects completed during the PTI's tenure only.

And I stand corrected, it's not $30 billion but $28 billion worth of 22 projects completed during PML-N's tenure as of October 2018.

CPEC projects worth $28bln completed in 4 years

Let's just agree to disagree brother because you're not looking at it from a Chinese or a Pakistani strategic point of view nor you're looking at it from a Government to Government point of view.

This is what the Chinese Embassy said in Dec 2018. Àhsan Iqbal is a chronic liar.


'ISLAMABAD - Since the inception of China Pakistan Economic Corridor five years ago, 11 development projects have so far been completed with as many under construction using a total investment of around $18.9 billion, which have also created 75,000 jobs for Pakistani people.'


Bro I was trying to tell you to look at it from Pakistan's economic perspective. You were the one naming PTI etc etc. I was trying to highlight the change in policy regarding imported fuel, cost of contracts and energy mix.

 
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