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Govt to get $10 billion in loans, grants in 2014-15

damdam786

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ISLAMABAD: The Nawaz Sharif government will receive the highest-ever foreign inflows in the shape of loans and grants of over $10 billion during 2014-15, The News has learnt.

Following the resumption of the World Bank and Asian Development Bank loans, as well as increased foreign loans and grants from bilateral creditors, the government is expecting foreign inflows of up to $10 billion against the estimates of $5.76 billion in the budget 2013-14.

“The net lending will stand at over Rs650 billion in the next budget as foreign inflows will cross the Rs1,000 billion mark and can touch Rs1,050 billion while repayment of loans in the shape of amortization will consume almost Rs400 billion,” said the official sources.

The finance ministry official claimed that the public debt would not surge despite obtaining heavy foreign loans as the government would retire its domestic debt proportionate to foreign loans. But there are certain risks as well because in case of revising downward the GDP growth, especially reduction in growth of Large Scale Manufacturing (LSM), the overall GDP growth might fall below four percent.

Then the debt-to-GDP ratio can go up instead of the official projected figures of bringing it down, said the sources.The official circles say the government is going to give a loud and clear message that there will be no more dependence on domestic banks to finance the budget deficit in a big way as had happened in the last five years when the increased demand of borrowing had resulted in a situation that the banks had started dictating terms knowing that the government had turned into a “desperate borrower”.

A senior official of the Finance Division confirmed to The News on Friday that Pakistan would become eligible for concessionary loan of $3 billion under the IDA-17 from July 1, 2014 and can get this amount within three year period. This funding, coupled with the ADB and IDB loans in the pipeline, will enable Islamabad to jack up its foreign assistance up to Rs1,000 billion against the envisaged estimates of Rs576 billion in the outgoing fiscal year.

In the budget 2013-14, the government had projected foreign inflows of Rs576 billion against the revised loan and grants figure of Rs243 billion in 2012-13.Interestingly, the foreign inflows in the first nine-month(July-Sept) period remained negative; Rs50 billion in the outgoing fiscal year as total foreign inflows stood at Rs196 billion against the repayment of loans to the tune of Rs246 billion in this period.

But the situation has changed altogether since April this year when first Saudi Arabia provided a gift of $1.5 billion in two installments and then Pakistan’s oversubscribed Eurobond fetched $2 billion in one go. The resumption of loans from the WB and ADB also helped the government to get another $1.5 to $2 billion into the national kitty.

The generous foreign inflow has increased the foreign currency reserves level to $13 billion and will touch $15 billion soon.In another important development, the finance ministry on Friday made changes in its fiscal operation for July-March period of the current fiscal year and disclosed that the budget deficit was 3.8 percent instead of the earlier released figures of 3.1 percent of the GDP for this period.

All this happened because of treatment of $1.5 billion from Saudi Arabia, as earlier the Finance Ministry had included it into the figures, resulting into fattening this head up to Rs157 billion for this period.

Now in its explanatory note on its website, the Finance Ministry states: “The high statistical discrepancy is due to the impact of a transfer receipt from a friendly country amounting to Rs157 billion which has been kept separately in an account Pakistan Development Fund. Without this, impact of statistical discrepancy would come to Rs14 billion which would imply a deficit of Rs969 billion i.e. approximately 3.8% of GDP which is significantly less than the last year’s deficit of 4.6% of GDP.”
 
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The good thing is we are able to secure loan unlike last few years when the World Bank/IMF were refusing to do business with us. The bad thing is we have to return loan with interest in the near future. But the good thing is we can use this money to develop infrastructure faster than our potential. The bad thing is if we are not able to achieve our goals it will become a big burden on us but the good thing is if we are able to use the money in right places we will be in good position to return the money and also get the infrastructure ready before our true potential.
 
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The good thing is we are able to secure loan unlike last few years when the World Bank/IMF were refusing to do business with us. The bad thing is we have to return loan with interest in the near future. But the good thing is we can use this money to develop infrastructure faster than our potential. The bad thing is if we are not able to achieve our goals it will become a big burden on us but the good thing is if we are able to use the money in right places we will be in good position to return the money and also get the infrastructure ready before our true potential.

In short loans are good if used wisely according to carefully studied plans for the welfare of the nation and the common man
 
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The good thing is we are able to secure loan unlike last few years when the World Bank/IMF were refusing to do business with us. The bad thing is we have to return loan with interest in the near future. But the good thing is we can use this money to develop infrastructure faster than our potential. The bad thing is if we are not able to achieve our goals it will become a big burden on us but the good thing is if we are able to use the money in right places we will be in good position to return the money and also get the infrastructure ready before our true potential.
The loans used for development spending pay off either in the shape of subsequent cash flows or the social savings. The problems arise with the loans for current expenditures since they are solely for consumption and thus increase debt servicing burden,

What a lie....
They took 1 trillion last month from SBP...
ISLAMABAD: The Nawaz Sharif government will receive the highest-ever foreign inflows in the shape of loans and grants of over $10 billion during 2014-15,
Kabi kabar comment karnay se pehlay news ko parh lena acha hota hay.
 
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Another ''gift'' of $1.5 billion is coming from GCC or not?
 
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:mad: Loan..................:hitwall:

Why why why why..................................require?

I agreed that loan require for some cases but not agree that someone totaly depend on loan.:disagree:

Pakistan should focus on development and bright future of our country. I know there are so many problems but we need fight and resolve. here, we are also a poor country but still good going in all departments:coffee:


Sala maine bhi credit card se bahut shopping ki thi GF ke liye aur abhi paise pay karte waqt naani yaad aa rahi hai...:cray:
 
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Pakistan isn't independant yet. So they need these loans. With budget of $30b, it's hard to feed this nation, specially when 1/4 goes to military
 
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I hope they realize across the border than loans are not free: you have to repay them back with interest at a later date.
 
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Almost every nation has debt. Pakistan I think has some $30b, which is good for the size of population.

Jungibaaz, what happened to my tourism thread? Can't access it.
 
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Almost every nation has debt. Pakistan I think has some $30b, which is good for the size of population.

I disagree, $30 billion on it's own doesn't mean much and it's not the right figure.

Take a look at this worrying trend, the opposite of what was happening in the Musharraf years.
pakistan-government-debt-to-gdp.png



Jungibaaz, what happened to my tourism thread? Can't access it.

I don't know. I haven't done anything to it.
 
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Well Mush era was one of the golden. In Pakistan, there's too much division. An authoritarian regime is much better for middle east nations. You can see why Eqypt couldn't swallow democracy, SA does better with monarchy (compare that to Venezuela, both have oil). Here, Pakistan votes PPP because Benazir died, before, her father was hanged. PML gets vote because there wasn't any better before and it was a product of military. PTI is new and were victim of rigging. They probably could've secured 90ish seats and maybe formed a gov't (Having 90 seats means less seats for PML). PPP gov't was entirely about saving their seat, that's it. That's why debt was on the rise and corruption. One major reason is, it's hard to form a complete gov't in Pakistan unlike the U.S. JUI is given ministries, MQM is giving ministries, JI is given ministries. No consensus on dams, one province says yes, one no.

Debt will rise even further in PML regime and corruption (biproduct of loans, more more, more corruption), but there will be extensive development. This is why I had wished to see a PTI gov't this term to reduce corruption and the next term with PML for development.

Honestly, if PML pulls off this load shedding, they'll secure next election. Parliament will pass some law granting Nawaz 4th term. Plus with metro train in Punjab, little progress with PTI in KPK (people prefer water, end to load shedding, over anti corruption). PML will likely secure a majority. Hell, I might even vote for them (don't experiment new if previous is fine), regardless of the debt. Debt is fine as long as there is development. I miss Ayub and Mush. Both times PPP destroyed the economy. Zulfiqar made Ayub go to war 1965 (little support from US thereafter), and PPP ending a good governance by Mush. If Mush was here today, he'd have held census and held local body elections.

I had 12 replies to that thread under alerts and when tried to access it didn't work. Maybe got deleted by mod?

Another question, why such drastic reduction in debt under mush era? He should've made more development and put a cap on debt. For example, 12 billion in debt reduction in 4 years? We could've gotten bullet trains across Pakistan or Metro train in every province.
 
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1102232788-1.gif

KPK Government failed to utilize the foreign aid/loans and could only spend 1.64 Billion out of 35 Billion. Not a single penny could be spent in 10 departments including sanitation, drainage,energy, social welfare, industries, rural development, research and development.
 
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