PML-N plans to take $12.53bn loan until June 2018

[Dawood Ibrahim]

Govt would also take $300 million from commercial banks in current financial year

By:
By Qazi Ziyad


18-Dec-16

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ISLAMABAD: The PML-N-led government has devised a plan to take foreign debts of $12.53 billion until June 30, 2018.

Under the plan the foreign debt of $6.63 billion would be taken during current financial year while a loan of $5.89 billion would be obtained during next fiscal year.

It is revealed that the government had already taken the loans of $20.500 billion during its three-year tenure from international donor agencies.

Due to the constant fall in the exports of the country, increasing imbalance in debt servicing , the government is under pressure to maintain the rate of inflation and it is only dependent on foreign debts. The pressure is mounting on the government by each passing day, as if the government would increase the rate of inflation, it would certainly bring a flood of price hike in the country, and it would be very difficult for it to go in the next elections.

Daily Times has got the documented evidence that the government has decided to take $6.63 billion during 2016-17 under Midterm Debt Management Strategy. Under the plan $2.85 billion would be taken from the World Bank, $500 million from the Asian Development Bank and $350 million would be obtained from other donor agencies for various developmental projects.

Similarly the government would also get $1 billion from Safe China Deposit, $500 million would be obtained from Euro Bonds, Islamic Development Bank and the Islamic Trade Finance Cooperation will give $1.13 billion.

In addition to the foreign debt the government would also take $300 million from the commercial banks in the current financial year.

The documents revealed that during the fiscal year of 2018-19 the government plans to take $5.95 billion as foreign debts.

The government had taken foreign loans of $8 billion in FY2013-14, $7.92 billion in financial year 2014-15 and $8.92 billion in fiscal year 2015-16.

In addition to this the government would have to pay interest of $2.74 billion on the loans taken during the last three years.

The country had to repay the total loans of Rs $40.800 billion before the 2013 general elections and with an addition to $20.500 billion during the PML-N government, the volume of total foreign debts would be swelled to $70.300 billion after next general polls.


http://dailytimes.com.pk/pakistan/18-Dec-16/pml-n-plans-to-take-1253bn-loan-until-june-2018

@Mentee @LA se Karachi

 

[Peaceful Civilian]

Getting loan is not bad thing, it happens in whole world but we should put some limit on it. We are taking record amount of loans

 

[SBD-3]

", the government is under pressure to maintain the rate of inflation and it is only dependent on foreign debts."
Well that's El-classico, inflation linked with foreign debt, must have been a failed PhD thesis. Inflation is linked with Exchange rate and prices of foreign commodities through external account and growth or reserve money and supply/demand shocks (via central bank borrowing) through domestic account

 

[Musketeeer]

Getting loan is not bad thing, it happens in whole world but we should put some limit on it. We are taking record amount of loans

We are not taking record amount of loans. Prove your statements with factual evidence.

 

[Path-Finder]

", the government is under pressure to maintain the rate of inflation and it is only dependent on foreign debts."
Well that's El-classico, inflation linked with foreign debt, must have been a failed PhD thesis. Inflation is linked with Exchange rate and prices of foreign commodities through external account and growth or reserve money and supply/demand shocks (via central bank borrowing) through domestic account

who will pay these loans back and at what interest rate are they being borrowed? what condition is this loan coming?

 

[Peaceful Civilian]

We are not taking record amount of loans. Prove your statements with factual evidence.

No, you prove that we are not taking record amount of loans. Prove your statements with factual figure with Past.
It's you are in government

 

[SBD-3]

who will pay these loans back and at what interest rate are they being borrowed? what condition is this loan coming?

Loan comes at condition that it will be used for some specific purpose. Most of the debt coming in multilateral debt (ADB,WB,KFW,DFID,USAID) for infrastructure, energy, microfinance, education, financial access and inclusion and capacity building projects. And expect more as the power projects have 75-25 D/E ratio so if you have 50 Billion dollars worth power projects in setup 75% of that amount will be loans.

 

[Dawood Ibrahim]

We are not taking record amount of loans. Prove your statements with factual evidence.

We shouldn't be taking it in first place coz the amount of resources we have . Plus the loan is re invested outside the countries to buy properties.

 

[cleverrider]

Keep taking loans and spend it on Punjab and Lahore (while taking your cut and win Punjabi hearts to win elections) working so far.

Which Karachi and the rest of the country will pay back. Carry on for another 10 – 20 years and you will forget Bangladesh.

 

[Path-Finder]

Loan comes at condition that it will be used for some specific purpose. Most of the debt coming in multilateral debt (ADB,WB,KFW,DFID,USAID) for infrastructure, energy, microfinance, education, financial access and inclusion and capacity building projects. And expect more as the power projects have 75-25 D/E ratio so if you have 50 Billion dollars worth power projects in setup 75% of that amount will be loans.

no I am not asking for a government definition on the type or purpose of the loans? no one gives you a loan on the borrowers terms it is at the lenders terms! what is the interest rate of payback? and the conditions on the loan?

 

[Clutch]

Keep taking loans and spend it on Punjab and Lahore (while taking your cut and win Punjabi hearts to win elections) working so far.

Which Karachi and the rest of the country will pay back. Carry on for another 10 – 20 years and you will forget Bangladesh.

Lol... nice try.

 

[cloud4000]

Looks like Pakistan government banking on CPEC to bail them out when the loans are due. Don't know when the Pakistan will start seeing the benefits -- tax revenue wise -- of CPEC. This is my guess.

 

[DJ_Viper]

", the government is under pressure to maintain the rate of inflation and it is only dependent on foreign debts."
Well that's El-classico, inflation linked with foreign debt, must have been a failed PhD thesis. Inflation is linked with Exchange rate and prices of foreign commodities through external account and growth or reserve money and supply/demand shocks (via central bank borrowing) through domestic account

Good explanation. Also, inflation is directly linked to the economical growth too. For example, the value of goods (real estate as an example) doesn't just go up because the ghosts are buying it, its because people can afford it and investors can invest into it.

For example, right now, there is a recession in the Middle East. The cost of rental in Dubai, next to their top end beach, is down by over 40% compared to last year, and so is the cost of groceries, etc. Why? its deflation because people have lost work and don't have enough to keep up with the higher cost of living. When the economy rebounds, things and prices will start to go up (inflation).

 

[SBD-3]

no I am not asking for a government definition on the type or purpose of the loans? no one gives you a loan on the borrowers terms it is at the lenders terms! what is the interest rate of payback? and the conditions on the loan?

Lender's term are included in what we call indenture. And plus multilateral lenders just don't handout the loan in lump sum amount but in tranches according to project's phase of completion. The interest on multilateral loans isn't high because these loans come with strict supervision so lenders have tighter controls and thus lower interest costs. This interest is about 1.5-3X lesser than what it would have costed to raise the money from the market. DFID,KFW,USAID,JICA loans are at meager interest rate. Most of the people wouldn't know but JICA is among the most active lenders in Pakistan heavily involved in social sector.

Good explanation. Also, inflation is also linked to growth too. For example, the value of goods (real estate as an example) doesn't just go up because the ghosts are buying it, its because people can afford it and investor can invest into it. So growth is also linked to inflation. For example, right now, there is a recession in the Middle East. The cost of rental in Dubai, next to their top beach, is down by over 40% compared to last year, and so is the cost of groceries, etc. Why? its deflation because people have lost work and don't have enough to keep up with the higher cost of living. When the economy rebounds, things and prices will start to go up (inflation).

Of course growth comes along inflation in fiat setup because growth in otherwise gold standard (fixed monetary supply) rather leads to deflation.

We shouldn't be taking it in first place coz the amount of resources we have . Plus the loan is re invested outside the countries to buy properties.

The problem is that a lot of savings are stuck in unproductive sectors like real estate, informal black economy and prize bonds etc. This saving can't be utilized for simulating the economy.

 

[Path-Finder]

Lender's term are included in what we call indenture. And plus multilateral lenders just don't handout the loan in lump sum amount but in tranches according to project's phase of completion. The interest on multilateral loans isn't high because these loans come with strict supervision so lenders have tighter controls and thus lower interest costs. This interest is about 1.5-3X lesser than what it would have costed to raise the money from the market. DFID,KFW,USAID,JICA loans are at meager interest rate. Most of the people wouldn't know but JICA is among the most active lenders in Pakistan heavily involved in social sector.

NO, What are the terms of the returns? interest on the loan? not summery of development roadmap. if you don't know then say that! doesn't matter anyway coming generations will pay it off no skin off the backs of the borrowers (not in wuddu)