Pakistan borrows another $500m from Chinese bank
By Shahbaz Rana
Published: February 17, 2018
The government contracted the loan on January 15 at a rate in the range of 4.5%, said sources in the finance ministry. PHOTO: REUTERS
ISLAMABAD: Pakistan has contracted another foreign commercial loan of $500 million from the Industrial and Commercial Bank of China (ICBC), taking the Chinese financial institution’s contribution to supporting a strong rupee against the US dollar to $1 billion in just three months.
The government contracted the loan on January 15 at a rate in the range of 4.5%, said sources in the finance ministry. In January, the country took total $704 million worth of new loans, taking foreign borrowings to $6.6 billion in just seven months of this fiscal year, said the sources.
Pakistan’s external debt, liabilities touch $89 billion
The foreign loans were equal to 86% of the annual budgetary estimates that parliament had approved in June last year. This suggests that foreign loans for the second consecutive year may cross $10 billion.
China was the single largest lender that gave a total of $1.6 billion, which was equal to one-fourth of the total foreign loans Pakistan has received in the last seven months. Beijing also gave roughly $610 million for project financing during the first seven months.
In terms of source, sovereign bonds were the single largest source after Islamabad raised $2.5 billion in November, which contributed roughly 38% to total foreign loans.
It was the second loan that the ICBC has given to Pakistan to support its diminishing foreign currency reserves, which are largely used to defend a strong rupee and finance the trade deficit. The ICBC had also given $500 million in October last year.
Sources in the State Bank of Pakistan said that it was still intervening in the exchange market to keep the dollar-rupee parity at current level. In December, the central bank let the rupee depreciate by 5.2% against the US dollar. But it was still far less than the International Monetary Fund’s assessment of the real value of the rupee.
With fresh foreign loans, the total foreign commercial borrowings in the first seven months of this fiscal year have increased to $1.8 billion, said the sources. The finance ministry had informed parliament in June last year that it would obtain $1 billion as commercial loans during 2017-18 that will end on June 30. However, it has already breached the limit with five months remaining.
So far, Citibank has given $267 million, Credit Suisse AG loaned $255 million, Standard Chartered Bank London $200 million and Dubai Bank $55.9 million. The share of foreign commercial banks in total loans stood at 27%.
The loans are obtained to stop the downward slide of the official foreign currency reserves that currently stand at $12.8 billion even after issuing $2.5 billion worth of sovereign bonds in November. The ministry is trying in vain to stop the reserves from slipping below the two-and-a-half-month import bill cover, which at current value of the import bill stands at $12.3 billion.
Official foreign currency reserves have depleted by $3.5 billion since July. The current account deficit during the first half of the fiscal year widened to over $7.5 billion.
The PML-N government has been accused of ruining the country’s exports by keeping rupee stronger and blocking taxpayers’ genuine refunds. This has kept the official non-debt creating inflows below requirements and caused a massive increase in the country’s external debt.
Foreign exchange: Worries increase as SBP’s reserves fall 1.74% to $12.8b
Pakistan’s total external debt and liabilities as of December 2017 stood at $88.9 billion, higher by $5.8 billion or 6.9% over six months ago. The main increase came by issuing sovereign bonds and taking expensive commercial loans. In the first half, debt obligated by issuing Sukuk and Eurobonds increased by 52% to $7.3 billion.
Similarly, the debt obtained by taking commercial loans increased to $5.3 billion excluding the impact of the fresh ICBC borrowing.
The Islamic Development Bank extended $846 million loans and the Asian Development Bank gave $481 million for projects’ financing in the first seven months. The World Bank released only $289 million in the July-January period, which is equal to 28% of the official annual estimates of $1.03 billion.
Published in The Express Tribune, February 17th, 2018.
https://tribune.com.pk/story/1637050/2-debt-pakistan-borrows-another-500m-chinese-bank/
This should be extremely worrying for the powers that be. Bajwa made some murmurs earlier, now even he has gone into silence mode. Makes one think. What gives?
PSEs debt swells to Rs238b over reforms absence
ISLAMABAD - Debt of the public sector entities has swelled by Rs237.8 billion by December 2017 due to the government's failure to bring reforms in the ailing public sector enterprises (PSEs).
Debt of the PSEs has increased to Rs888.8 billion at the end of December 2017 as compared to Rs651 billion a year ago, showing an increase of 36.5 percent. The debt is increasing at rapid pace as ailing PSEs could not meet its expenses due to their heavy losses.
The government has failed to privatize the loss-making PSEs including Pakistan International Airlines (PIA), Pakistan Steel Mills and power sector companies in last four and half years.
Similarly, losses of power sector entities and PIA are increasing with the passage of year. The incumbent government is under severe pressure for increasing domestic as well as foreign debt servicing as it continues to pay mostly interest. Similarly, PSEs are increasing to overall debt servicing.
Meanwhile, the collective debt and liabilities of PSEs have increased to Rs1108.6 billion at the end of December 2017 compared to Rs856 billion a year ago, according to the data of State Bank of Pakistan.
Liabilities alone have swelled to Rs219.7 billion in 2017 as against Rs204.9 billion of a year ago.
PIA's debt has increased to Rs134.9 billion at the end of December 2017 as compared to Rs103.2 billion of a year ago. The government is now claiming to privatize the national flag carrier before ending its tenure.
Federal Privatization Minister Daniyal Aziz last month announced his plans to trigger the process for the sale of PIA.
Debt of Pakistan Steel Mills remained at Rs43.2 billion. The Pakistan Steel Mills (PSM) was forced to shut down two and half years back. The PSM management is not in position to pay the salaries to the employees. The federal government is paying salaries to the PSM's workers from its own resources. The government failed to privatise Pakistan Steel.
Water and Power Development Authority (Wapda) recorded an increase of over Rs20 billion in one year, as its debt increased to Rs82.1 billion at the end of December 2017, which was Rs61.1 billion a year ago. Oil and Gas Development Corporation (OGDC)'s debt has shown slight increase of Rs400 million and recorded at Rs3.5 billion in December 2017.
Meanwhile, debt of other PSEs has swelled Rs625 billion at the end of December 2017 as compared to Rs440 billion of the last year, according to the latest data of the State Bank of Pakistan.
https://nation.com.pk/17-Feb-2018/pses-debt-swells-to-rs238b-over-reforms-absence
By Shahbaz Rana
Published: February 17, 2018
The government contracted the loan on January 15 at a rate in the range of 4.5%, said sources in the finance ministry. PHOTO: REUTERS
ISLAMABAD: Pakistan has contracted another foreign commercial loan of $500 million from the Industrial and Commercial Bank of China (ICBC), taking the Chinese financial institution’s contribution to supporting a strong rupee against the US dollar to $1 billion in just three months.
The government contracted the loan on January 15 at a rate in the range of 4.5%, said sources in the finance ministry. In January, the country took total $704 million worth of new loans, taking foreign borrowings to $6.6 billion in just seven months of this fiscal year, said the sources.
Pakistan’s external debt, liabilities touch $89 billion
The foreign loans were equal to 86% of the annual budgetary estimates that parliament had approved in June last year. This suggests that foreign loans for the second consecutive year may cross $10 billion.
China was the single largest lender that gave a total of $1.6 billion, which was equal to one-fourth of the total foreign loans Pakistan has received in the last seven months. Beijing also gave roughly $610 million for project financing during the first seven months.
In terms of source, sovereign bonds were the single largest source after Islamabad raised $2.5 billion in November, which contributed roughly 38% to total foreign loans.
It was the second loan that the ICBC has given to Pakistan to support its diminishing foreign currency reserves, which are largely used to defend a strong rupee and finance the trade deficit. The ICBC had also given $500 million in October last year.
Sources in the State Bank of Pakistan said that it was still intervening in the exchange market to keep the dollar-rupee parity at current level. In December, the central bank let the rupee depreciate by 5.2% against the US dollar. But it was still far less than the International Monetary Fund’s assessment of the real value of the rupee.
With fresh foreign loans, the total foreign commercial borrowings in the first seven months of this fiscal year have increased to $1.8 billion, said the sources. The finance ministry had informed parliament in June last year that it would obtain $1 billion as commercial loans during 2017-18 that will end on June 30. However, it has already breached the limit with five months remaining.
So far, Citibank has given $267 million, Credit Suisse AG loaned $255 million, Standard Chartered Bank London $200 million and Dubai Bank $55.9 million. The share of foreign commercial banks in total loans stood at 27%.
The loans are obtained to stop the downward slide of the official foreign currency reserves that currently stand at $12.8 billion even after issuing $2.5 billion worth of sovereign bonds in November. The ministry is trying in vain to stop the reserves from slipping below the two-and-a-half-month import bill cover, which at current value of the import bill stands at $12.3 billion.
Official foreign currency reserves have depleted by $3.5 billion since July. The current account deficit during the first half of the fiscal year widened to over $7.5 billion.
The PML-N government has been accused of ruining the country’s exports by keeping rupee stronger and blocking taxpayers’ genuine refunds. This has kept the official non-debt creating inflows below requirements and caused a massive increase in the country’s external debt.
Foreign exchange: Worries increase as SBP’s reserves fall 1.74% to $12.8b
Pakistan’s total external debt and liabilities as of December 2017 stood at $88.9 billion, higher by $5.8 billion or 6.9% over six months ago. The main increase came by issuing sovereign bonds and taking expensive commercial loans. In the first half, debt obligated by issuing Sukuk and Eurobonds increased by 52% to $7.3 billion.
Similarly, the debt obtained by taking commercial loans increased to $5.3 billion excluding the impact of the fresh ICBC borrowing.
The Islamic Development Bank extended $846 million loans and the Asian Development Bank gave $481 million for projects’ financing in the first seven months. The World Bank released only $289 million in the July-January period, which is equal to 28% of the official annual estimates of $1.03 billion.
Published in The Express Tribune, February 17th, 2018.
https://tribune.com.pk/story/1637050/2-debt-pakistan-borrows-another-500m-chinese-bank/
This should be extremely worrying for the powers that be. Bajwa made some murmurs earlier, now even he has gone into silence mode. Makes one think. What gives?
PSEs debt swells to Rs238b over reforms absence
ISLAMABAD - Debt of the public sector entities has swelled by Rs237.8 billion by December 2017 due to the government's failure to bring reforms in the ailing public sector enterprises (PSEs).
Debt of the PSEs has increased to Rs888.8 billion at the end of December 2017 as compared to Rs651 billion a year ago, showing an increase of 36.5 percent. The debt is increasing at rapid pace as ailing PSEs could not meet its expenses due to their heavy losses.
The government has failed to privatize the loss-making PSEs including Pakistan International Airlines (PIA), Pakistan Steel Mills and power sector companies in last four and half years.
Similarly, losses of power sector entities and PIA are increasing with the passage of year. The incumbent government is under severe pressure for increasing domestic as well as foreign debt servicing as it continues to pay mostly interest. Similarly, PSEs are increasing to overall debt servicing.
Meanwhile, the collective debt and liabilities of PSEs have increased to Rs1108.6 billion at the end of December 2017 compared to Rs856 billion a year ago, according to the data of State Bank of Pakistan.
Liabilities alone have swelled to Rs219.7 billion in 2017 as against Rs204.9 billion of a year ago.
PIA's debt has increased to Rs134.9 billion at the end of December 2017 as compared to Rs103.2 billion of a year ago. The government is now claiming to privatize the national flag carrier before ending its tenure.
Federal Privatization Minister Daniyal Aziz last month announced his plans to trigger the process for the sale of PIA.
Debt of Pakistan Steel Mills remained at Rs43.2 billion. The Pakistan Steel Mills (PSM) was forced to shut down two and half years back. The PSM management is not in position to pay the salaries to the employees. The federal government is paying salaries to the PSM's workers from its own resources. The government failed to privatise Pakistan Steel.
Water and Power Development Authority (Wapda) recorded an increase of over Rs20 billion in one year, as its debt increased to Rs82.1 billion at the end of December 2017, which was Rs61.1 billion a year ago. Oil and Gas Development Corporation (OGDC)'s debt has shown slight increase of Rs400 million and recorded at Rs3.5 billion in December 2017.
Meanwhile, debt of other PSEs has swelled Rs625 billion at the end of December 2017 as compared to Rs440 billion of the last year, according to the latest data of the State Bank of Pakistan.
https://nation.com.pk/17-Feb-2018/pses-debt-swells-to-rs238b-over-reforms-absence
