Pakistan borrows another $700m to ease pressure off reserves

Pakistan government wants to release the pressure on its foreign exchange reserves and take the loan of $700m from European commercial bank at an interest rate of 4.47pc. The fresh loan was taken at the interest rate of 4.47pc which is relatively lower than the previous ones but the World Bank has provided a policy to charge 0.5pc a year fee for it and made the loan with the interest rate of 4.97pc but better than previous rates.

The Pakistan is under developed country and government wants to enhance the progress of the region where most of the loans taken recently were used to pay off the previous ones. The government has recently taken two loans of $622m from Asian Development Bank.

These loans showed that government has taken $3.6 billion from the foreign commercial bank since last September and they need to pay one-time 0.25 percent upfront fee to the World Bank for a recent loan. This shows that Pakistan has taken the highest borrowing ever in the history as the amount swelled about $9 billion in one year although the final figure should reveal in the ending of next month this year was the highest borrowing year for the country.

The country director for Pakistan posted the tweet on Wednesday stating that ‘Two world bank guarantees help Pakistan secure over $1 billion in international financing at very attractive rates’. The person is World Bank country director of Pakistan added that these loans helped the country to meet the market access and better terms to save $120m from interest payments and increase the payment period from usual three years to ten years. The government finance needs to borrow the more loans as they fall in receipts from foreign payments to meet its external requirements.

The external sector has also come under pressure due to a massive increase in current which reached $9 billion for just eleven months.