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Pakistan gets $230m loans to cushion forex reserves

Discussion in 'World Economy' started by Som Thomas, Sep 9, 2017.

  1. Som Thomas

    Som Thomas 2nd Lieutant FULL MEMBER

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    Pakistan gets $230m loans to cushion forex reserves

    ISLAMABAD: Pakistan has received two short-term loans worth $230 million from international creditors, meant to keep the official foreign exchange reserves at a level sufficient to provide cover to three-month import bill.

    According to officials, the country received an amount of $153 million from Citibank in August. Besides, Islamic Development Bank (IDB) gave a $77 million short-term loan in July for crude oil import.

    The IDB’s short-term facility is meant for import of crude oil from Saudi Arabia and the lender directly makes payments to the oil supplier on behalf of an oil importer. It partially helped lower pressure on the country’s forex reserves.
    From April to May this year, Pakistan had signed three separate short-term loan agreements with the IDB valuing $700 million. Of this amount, Pakistan has already imported crude oil equivalent to $340 million.

    For the current fiscal year, the government has estimated receiving $1.55 billion short-term loan from the IDB against the oil import facility.

    Pakistan may soon be ineligible for World Bank loans

    Sources in the State Bank of Pakistan (SBP) said higher than anticipated foreign remittances in August also helped keep the official foreign currency reserves above the three-month import cover level.

    They said that in August, Pakistan received around $2 billion in foreign remittances, partly because of the seasonal effect of Eidul Azha.

    The SBP is expected to officially announce the foreign remittances statistics next week.

    During the week ending August 31, 2017, the SBP’s reserves increased by $338 million to $14.681 billion due to official inflows, the central bank had reported on Thursday.

    For almost one month, Pakistan was touching the three-month import cover border line as its reserves remained at around $14.3 billion.

    WB links loans to liberal foreign exchange policy

    In order to avoid downgrading in its credit ratings and keep the tap of budget financing open from the World Bank, Pakistan has to maintain its official foreign currency reserves above the three-month import cover level.

    The finance ministry is currently making arrangements for floating about $1 billion worth of Sukuk Bonds by middle of November and a better credit rating will help lower the cost of borrowing. It had also raised $1 billion last year at 5.5% interest rate – the lowest rate on the Islamic bond that it ever paid.

    The government was reviewing different options to keep the reserves above the level of three-month import bill. The options included incentives for expatriates to invest in Pakistani dollar-denominated bonds, more restrictions on imports and steps that will encourage exporters to bring back export proceeds.

    Finance Minister Ishaq Dar on Friday held a meeting with his Chinese counterpart Xiao Jie and discussed issues of mutual interests – including ways and means to further enhance bilateral economic relations.

    Record budget deficit: Govt throws austerity out of the window

    During FY2016-17, Pakistan had borrowed a record $10.1 billion external loans that included a record-breaking $4.4 billion short-term financing.

    Out of this, $2.3 billion came from Chinese financial institutions. The government took $1.7 billion from the China Development Bank, $300 million from the Industrial and Commercial Bank of China, and $300 million from the Bank of China.

    It also obtained $445 million from the Noor Bank of the UAE, $650 million from a consortium of the Suisse Bank, the UBL and the ABL, $275 million from Citi and $700 million from the Standard Chartered Bank, London.

    This was the first time in Pakistan’s history that any government has taken over $10 billion as fresh foreign loans in a single year.

    Pakistan Tahreek-e-Insaf Chairman Imran Khan on Thursday called Finance Minister Ishaq Dar Pakistan’s economic hitman while criticising his economic policies.

    In July, Pakistan obtained a total of $254.9 million loans, including $77 million from IDB. It received $75 million from the World Bank for project financing.

    China also gave $71.5 million worth of loans for carrying out various Beijing-funded schemes. The Asian Development Bank provided $28.8 million worth of loans.

    The $254.9 million loans were 3.2% of the total annual budgetary estimates of $8 billion for FY2017-18.

    https://tribune.com.pk/story/1501689/money-matters-pakistan-gets-230m-loans-cushion-forex-reserves/

    Forex Reserves of Pakistan 15bn$ (was ~22bn$ a year ago) :basketball:
    Bangladesh 36bn$
    India 395bn$ (Latest report shows 398billion$)
    China 3.1tr$
     
    Last edited: Sep 9, 2017
  2. Som Thomas

    Som Thomas 2nd Lieutant FULL MEMBER

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    Wolfpack likes this.
  3. Ankit Kumar 001

    Ankit Kumar 001 Major Technical Analyst

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    Taking loans to keep up the reserves.... CPEC
     
  4. nair

    nair Die hard Romeo Staff Member ADMINISTRATOR

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    Still we get economic lectures from across the border..... Raw investment in Pakistan is unnecessary..... They are screwing themselves.....
     
  5. Abingdonboy

    Abingdonboy Major Technical Analyst

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    I can never quite figure Pakistan out, they go from positives to negatives seemingly overnight. It wasn't long ago their reserves were growing at a steady pace and they were targettng $30bn now they are dropping?

    Their entire system seems designed to keep them indebted to some suger daddy or another....
     
    Blackjay and Pundrick like this.
  6. Pundrick

    Pundrick Lieutenant FULL MEMBER

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    Unplanned economy at its best, they thought devaluation of PKR will help them with exports but it has struck them quite hard now, they are loosing FX very rapidly.

    We will soon hear some so called good news from IMF and WB regarding that Pak economy will pickup and will get on development path to woo some of the investors from west but lets see if that ever happens. Pak desperately needs FDI or at least remittances to get the fx to at least 3-4 months or otherwise you'll hear "Ram naam Satya hai" in our neighborhood as they'll go for bailout package.

    There are very few ways for them to revive their economy :
    1). Open route for India & Afghanistan, earn some forex.
    2). Close market for Chinese cheaper product(which can be produced inside Pak).
    3). Capacity Building, which is very important, as Chinese are building power plant and there is nobody to utilize it, plus this power is actually coming at higher price.
    4). Beg Middle-east countries to take as many pakistani as possible as laborers.
     
    Abingdonboy likes this.
  7. Notsuperstitious

    Notsuperstitious 2nd Lieutant FULL MEMBER

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    Dont worry dollars will flow from taps once CPEC magic wand starts functioning.

    The Pakistanis are the dumbest people with the highest opiniin of themselves. Not ONE decent intellectual can be found there, all are just big talking religious or racist nutjobs with an inferior intellectual upbringing.

    Their biggest scientist hero thinks water car is possible, need more be said about that inbred race?
     
    Last edited: Sep 10, 2017
  8. Blackjay

    Blackjay Developers Guild Developers -IT and R&D

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    Well to be fair they do have lot of intellectuals but.......




    Wait a minute,why am I being fair????
     
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  9. Golden_Rule

    Golden_Rule Lieutenant FULL MEMBER

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    When a country's core policy is built around "obsessive hatred" of the Indian race they belong to, and are recursively defending a non-human alien philosophy of Islam from Arabia, the only endgame to such an approach is self destruction!
     

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