Pakistan borrows $500mn from China to support diminishing reserves
Pakistan has taken another foreign commercial loan of $500mn from Industrial and Commercial Bank of China (ICBC) to support its diminishing foreign currency reserves. ICBC's total contribution to supporting a strong Pakistani rupee against the USD rose to $1bn in only three months, reported Pakistan's The Express Tribune. Pakistan's government contracted the loan on 15 January at a rate of around 4.5% Here's more.
25% of Pakistan's total foreign loans received from China
Pakistan took new loans worth $704mn in Jan'18, taking the foreign loans up to $6.6bn in only seven months of the current fiscal of which $1.6bn was taken from China, the single-largest lender. The foreign loans are equal to 86% of the country's annual budget estimates approved by the Parliament in Jun'17, Pakistan's foreign borrowings may cross $10bn for the second consecutive year.
Second loan from ICBC to support foreign currency reserves
The Express Tribune says sovereign bonds are Pakistan's single-largest source that contributes to 38% of the total foreign borrowings after the country received $2.5bn in November. The latest borrowing is the second loan that ICBC has given to Islamabad to shore up its diminishing foreign currency reserves used for defending a strong Pakistani rupee and finance trade deficit. ICBC gave $500mn in Oct'17, too.
State Bank of Pakistan's intervention in the forex market
The State Bank of Pakistan is intervening in the foreign exchange market for keeping Pakistani rupee's parity with the USD at the current level, according to sources. The central bank let Pakistani rupee depreciate by 5.2% against the USD in Dec'17. The Express Tribune, however, stated it was still less than the International Monetary Fund's assessment of the real value of the Pakistani rupee.
Foreign commercial banks account for 27% of Pakistan's total loans
Pakistan's total foreign commercial loans in the first seven months of 2017-18 have increased to $1.8bn. The country's Finance Ministry said it would take only $1bn-worth commercial loans during 2017-18, ending on 30 June; this limit, however, was breached with five months remaining. Pakistan received $267mn from Citibank, $255mn from Credit Suisse AG, $200mn from Standard Chartered Bank London, and $55.9mn from Dubai Bank.
Trying in vain to stop downward slide of reserves: Report
Pakistan is borrowing from foreign banks to stop the downslide of the official foreign currency reserves currently standing at only $12.8bn despite raising $2.5bn by issuing sovereign bonds in Nov'17. Pakistani Finance 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 $12.3bn," stated The Express Tribune.
Pakistan's reserves depleted by $3.5bn since July
Pakistan's official foreign currency reserves diminished by $3.5bn in the first seven months of 2017-18 while the current account deficit in the fiscal's first-half increased to over $7.5bn. The country's total external debt and liabilities stood at $88.9bn as of Dec'17, which is $5.8bn or 6.9% higher than six months ago. Issuing sovereign bonds and expensive commercial loans were responsible for the rise.
