PTI govt borrowed more than $12 billion during the 11 months of the current fiscal year FY21 – an increase of about 63 percent compared to the same period in FY20 – reflecting the growing need for foreign currency despite record remittances and the increase in exports.
This higher borrowing was made despite a current account surplus that was not expected before the start of the new fiscal year 21.
During 11MFY21, the current account is still in surplus with $153 million, which has been a major support for the external account of the economy, particularly in the presence of 29% growth in remittances.
During July-May of fiscal year 21, the government borrowed $12.13 billion compared to $7.44 billion in the same period of the previous fiscal year, recording an increase of $4.68 billion or 62.8%.
Borrowing from multilateral sources was $3.37 billion, while commercial banks totaled $3.61 billion. Commercial loans cost a lot and debt service will increase even more in the coming years. During the first three-quarters of FY21, the government paid $10.63 billion as debt service, while the expected total at the end of the fiscal year could be around $14 billion.
Among multilateral sources, the ADB provided $1.28 billion, the International Development Association (IDA) $850 million, and the IDB provided $508 million as short-term financing.
Pakistan received $417 million from bilateral sources. Total multilateral and bilateral loans reached $3.79 billion during 11MFY21.
The data shows that loan inflows during May w990ere around $699.7 million. However, the government remained close to the target established in the budget for grants and loans.
The budget shows the FY21 grant inflow of $275.8 million, while the 11MFY21 inflow reached $231.6 million. Likewise, borrowings estimated in the budget were $11.96 billion, while they reached $11.90 billion during this period.