Home »Business and Economy » Pakistan » Shocking spike in July-December external loans

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  • Feb 23rd, 2018
  • Comments Off on Shocking spike in July-December external loans
The government's reliance on external loans to finance the budget deficit increased by 826 percent in July-December 2017 to Rs 338.5 billion from Rs 36.5 billion during the first quarter of the current fiscal year, according to Finance Ministry. Finance Division in its consolidated budgetary operation revealed that net external financing increased to Rs 384 billion to finance 2.2 percent budget deficit in July-December 2017 as opposed to Rs 7.9 billion in the first quarter of the current fiscal year.

Sources said reliance on foreign loans is expected to increase in the second half of the current fiscal year due to an increase in development spending in the remaining few months of the tenure of the present government ahead of 2018 general elections. Gross external financing increased to Rs 612 billion in July-December 2017 from Rs 150 billion in the first quarter while net external financing rose to Rs 394 billion as opposed to Rs 7.9 billion in the first quarter subsequent to less repayment of external debt of Rs 228 billion.

The government borrowing from non-bank sources witnessed an increase in the second quarter of the current fiscal year. Non-bank borrowing to finance the budget deficit increased to Rs 80.4 billion in July-December 2017 from Rs 24.5 billion in July-September 2017 with an increase in public debt from Rs 1.4 billion to Rs 34 billion during the period under review, prize bonds Rs 30.4 billion to Rs 45.6 billion, foreign currency instruments Rs 2 million to Rs 215 million, treasury bills to Rs 126 billion during July-December 2017 from Rs 111 billion in July-September 2017.

The government borrowing from public accounts namely saving schemes, GP fund and deposits and reserves recorded Rs 43.2 billion in July-December 2017 compared to Rs 24.36 billion in July-September 2017 to finance the budget deficit. The government borrowed Rs 46 from saving schemes in July-December 2017 to finance the fiscal deficit as opposed to Rs 19.9 billion in the first quarter of the current fiscal year.

The government maintains that external inflow on account of project financing was Rs 126.4 billion during the second quarter of the current fiscal year as opposed to Rs 56.9 billion during the first quarter of the current fiscal year, project loans increased to Rs 131.5 billion in July-December 2017 as opposed to Rs 50.4 billion in the first quarter of the current fiscal year and grants stood at Rs 6.379 billion in July-December 2017 as compared to Rs 2.24 billion in the first quarter of the current fiscal year.

Copyright Business Recorder, 2018


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