Pakistan to get $1 billion loan from a friendly country

KARACHI: Pakistan will get a loan of $1 billion from commercial bank of a friendly country to shore up fast depleting foreign currency reserves, Geo News quoted sources in State Bank of Pakistan as saying.Pakistan's foreign exchange reserves decreased to $17.13 billion in the week ending April 20, compared to $17.54 billion in the previous week, the SBP said on Thursday. After the loan, the reserves would cross $18 billion mark.There were no more details available in this regard, however, a news story in this paper last month had stated that the government is all set to ‘secure commercial loan of $1 billion to $1.5 billion from Chinese banks within the next two weeks’.The country had already raised $1.77 billion short-term commercial loans from various foreign banks, mainly Chinese, against a target of $1 billion for the current fiscal year of 2017/18.With the upcoming transaction, total short-term debt might go close to $3 billion mark.“The planned short-term loan transactions would be meant for two to three years period and efforts would be made to keep the rates low,” an official told The News.Pakistan requires dollar inflows to manage its financing requirements in the wake of yawning current account deficit. The current account deficit is projected to go up to $16 billion in the current fiscal as it stood at $10.4 in the first seven months of the FY18.“We have worked out that some non- debt inflows will pour in the remaining months of the outgoing fiscal year to check depletion of foreign currency reserves,” the official said.“We expect that the foreign direct investment will touch $3 billion mark as it had already poured to the tune of $1.6 billion in first seven months.”The official said the private sector credit in dollars will also bring sizeable inflows.“The remaining gap will be bridged through short-term commercial borrowings from international banks,” he added.“All requirements for obtaining loan in the range of $1 to $1.5 billion have been accomplished and it is hoped that this transaction will be done within first two weeks of next month (April 2018).”The country had already obtained $7.6 billion from multilateral and bilateral creditors in the current fiscal year but the foreign currency reserves held by the SBP continued to decline.Pakistan requires an immediate injection of $6 billion to $8 billion to keeping its foreign currency reserves afloat otherwise rapidly depleting reserves could deepen the crisis in coming months.