Heavy borrowing fails to satisfy govt’s quench
ISLAMABAD-Despite getting huge loans from different sources, government’s thirst for taking loans is yet to be quenched as it is all set to receive above two billion dollars from World Bank and Asian Development Bank in next couple of months.
The World Bank would provide $1.74 billion loan next month (May) and Asian Development Bank (ADB) would give $500-600 million in next two months (May and June). The PML-N government is heavily relying on loans after assuming the charge on June 5, 2013, mainly to build the reserves, which went down to alarming position after making heavy installments of IMF loans taken by the previous government of Pakistan Peoples Party.
According to the documents, the World Bank would give approval for $1.74 billion for Pakistan during its board meeting, to be held next month of May 2014. The WB would approve $700 million for Dasu Hydropower Stage-1 Project during its board meeting to held on May 29, 2014. Dasu Hydro Power Project having capacity of generating 4320-megawatt electricity would be completed with total cost of Rs 735 billion wherein World Bank would provide $700 million.
Similarly, the World Bank would approve $500 million for power sector reforms in its meeting to be held on May 1, 2014 wherein approval of $500 million would also be granted for Pakistan’s growth and investment programme. The WB recently approved $40 million for CASA-1000 project on March 27 2014. Central Asia South Asia Electricity Transmission and Trade Project (CASA-1000), a new electricity transmission system to connect all four countries (Afghanistan, Kyrgyz Republic, Pakistan and Tajikistan), would make the most efficient use of clean hydropower resources in the Central Asian countries by enabling them to transfer and sell their surplus electricity during the summer months.
Apart from World Bank, the Asian Development Bank would also provide loan of $500-600 million in next couple of months (May and June 2014). Prior to the World Bank and Asian Development Bank’s loan, the PML-N government had successfully singed several agreements with other financial institutions, which helped it to build its reserves.
has recently held the successful auction of Eurobond in international market, which would generate two billion dollars for the cash-starved government. The State Bank of Pakistan would receive two billion dollars by April 15, 2014.
Similarly, the government had signed extended fund facility programme (EFF) worth of $6.64 billion with IMF in early September last year. The government had received three tranches worth of $1.6 billion from the Fund. Later, the government had received massive amount of $1.5 billion from Saudi Arabia, what the federal minister termed as ‘gift’ from a friendly country.
The aforesaid funds helped in building the country’s foreign exchange reserves. Pakistan’s foreign exchange reserves currently stood at $9.713 billion wherein State Bank of Pakistan-held reserves are $4.943 billion and $4.77 billion of commercial banks (other than the SBP). The government has target to increase the reserves to $16 billion by the end of June 2014.