Foreign banks $7.9 billion loans procured at higher interest rates

Pakistan Muslim League (PML-N) government has procured $7.9 billion commercial loans from foreign banks from June 2013 to-date at considerably higher interest rate ranging between + 4.5 percent to 2.5 LIBOR. The Economic Affairs Division shared details of commercial loans from foreign banks with the Finance Committee in in-camera session in the two Houses (Senate and National Assembly) which revealed that the government borrowed $323 million in 2013-14, $150 million in 2014-15, 1387 million in 2015-16, and a whopping $4370 million in 2016-17.
A copy of the presentation available with Business Recorder further revealed that the government borrowed an additional $1022 million from foreign banks during the first four months of the current fiscal year and $70 million in the month of November 2018 to support the fast declining foreign exchange reserves of the country. Sources said increasing pressure on balance of payments at the outset of the current fiscal year on account of widening trade deficit consequent to persistent contraction in exports and increase in imports led to a rise in government reliance on commercial borrowings.
In 2013-14 the government borrowed $172.5 million from Standard Chartered (UK) at 3 month LIBOR + 4 percent rate of return for a period of one year and $150 million from Credit Suisse at 3 month LIBOR + 4.5 percent for one and half years.
In 2014-15 the government borrowed $100 million commercial loans from Noor Bank UAE (against 3G/4G) at 3 month LIBOR +4.25 percent interest rate for 4 years and $50 million from Al-Khiliji Commercial Bank UAE (merged with Credit Suisse) at 3 month LIBOR +3.81 percent for one year. In 2015-16 the government borrowed $408 million and $325 million from Credit Suisse at 3 month LIBOR + 2.8 percent and 3 month LIBOR + 3.25 percent interest rate respectively for a period of one and half years as well as $265 million from Noor Bank at 3 month LIBOR +3.75 percent rate of return for one year.
The government also procured $250 million commercial loans from Credit Suisse at 3 month LIBOR + 2.66 percent for one year, $75 million from Noor Bank at 3 month LIBOR +4.1 percent rate of return for a period of fifteen months and $70 million from Dubai Islamic Bank at 6 month LIBOR +2.50 percent for one year period.
The government further borrowed $1 billion from China Development Bank at 3 month LIBOR + 3 percent for 3 years, $700 million from China Development Bank at 3 month LIBOR + 3.02 percent for 3 years, $700 million from Standard Chartered (UK) at 5.14 percent for ten years, $650 million from Credit Suisse at 3 month LIBOR + 2 percent for one year, $245 million from Noor Bank at 3 month LIBOR +2.50 percent for 2 years, $300 million from Bank of China at 3 month LIBOR +2.70 percent for 3 years, $275 million from Citibank at 3 month LIBOR +3.226 percent for 3 years, $200 million again from Noor Bank at 3 month LIBOR +2.30 percent for 2 years and $300 million from Industrial and Commercial Bank of China Limited (ICBC) China at 3 month LIBOR +2.75 percent for 2 years.
In the current fiscal year the government has borrowed $500 million from ICBC (China) at 3 month LIBOR +3.25 percent for 3 years, $267 million from Citibank at 3 month LIBOR +2.70 percent for 2 years, $255 million from Credit Suisse at 3 month LIBOR +2 percent for one year and $70.37 million from Standard Chartered Bank (SCB)-London (details not yet revealed).