Pakistan Has Mortgaged These Airports, Motorways & Buildings to Get Loans

For decades, Pakistani governments have been taking loans to fulfill local demands and start new projects. As things stand, Pakistan’s foreign debts have currently crossed the $75 billion mark.

Read More: Pakistan’s External Debt Will Soon Cross a Staggering $75 Billion

In recent times, the loan amounts have reached such highs that not even international or local lending institutions are willing to loan money under simple conditions since they want assurances that their investments won’t go in vain.

For that reason, Pakistani governments have started putting national assets of extremely high value as guarantees (mortgage) in exchange for more loans or otherwise for Sukuk Bonds.

What are Sukuk Bonds?

Sukuk bonds are Islamic bonds. They are structured in such a way that investors get returns without infringing any Islamic law (for example, no interest is charged on such investments). Sukuk represents undivided shares in the ownership of tangible assets relating to special investment activity. In other words, the bond issuing authority purchases an asset and the investors get partial ownership and returns.

The issuer also has to buy the bond back at par value at a later date.

We’ve compiled a list of national assets and the details regarding their mortagage based on official as well as leaked documents in the public domain. The sources have been included in the end.

Lets take a look at them one by one.

Jinnah International Airport Karachi Mortgaged

Back in 2013, the government used Jinnah International Airport Karachi as security for the Sukuk bonds and raised Rs. 182 billion based on it. The profits for bonds were to be paid using the income from the airport.

The Karachi airport hasn’t been mortgaged just once. Here are all the instances where it has been used as collateral:

  • 2013 was the first year where the airport was put as collateral to borrow Rs. 182 billion.
  • In December 2015, Rs. 117 billion were borrowed against the Karachi airport.
  • In February 2016, Rs. 116.2 billion were raised by putting the airport on mortgage.
  • A month later, in March 2016, the government used the airport as the underlying asset to borrow another Rs. 80.4 billion.

These amounts were received from local and international institutions and investors.

National Motorways and Highways Mortgaged

Recently, Pakistan government was ready to put up Sukuk bonds in order to raise $500 million from investors but it was oversubscribed at $2.4 billion.

Finally, the government decided to raise $1 billion from foreign investors by mortgaging the Islamabad-Chakwal section of the Islamabad-Lahore (M2) motorway. These bonds are set to mature within 5 years.

Back in 2014, the government pledged the Hafizabad-Lahore section of the M2 motorway to raise another $1 billion in terms of Sukuk Bonds with a 5-year maturity period.

In June 2014, the government borrowed Rs. 49.5 billion by mortgaging the Faisalabad-Pindi Bhatian Motorway (M3).

According to official reports from the Finance Minister and leaked documents from journalist Rauf Klasra the following motorways are already pledged to get loans:

  • Peshawar-Faisalabad motorway
  • Faisalabad-Pindi Bhattian motorway
  • Islamabad-Peshawar motorway
  • Islamabad-Lahore motorway

The news about the above mentioned M2 motorway was also leaked by Rauf Klasra before official announcement.

Back in 2006, the government decided to pledge most of the national highways and some motorways in order to raise Rs. 6 billion. Islamabad-Peshawar Motorway (M-I), Faisalabad-Multan Motorway (M-4), Islamabad-Murree-Muzaffarabad Dual Carriageway (IMDC), Jacobabad Bypass, D.G.Khan-Rajanpur Highway, Okara Bypass and several other toll-yielding projects were set as security. A consortium of banks provided the loan for seven years.

With this, the trustees own the motorway, all constructions on it, flyovers and interchanges in case of late payment.

PTV Mortgaged

According to leaked documents, Pakistan government has decided to mortgage all PTV assets in the whole country as collateral for more loans.

The PTV assets are estimated to be worth in billions of rupees at the very least and the national television also holds great importance as far as national security is concerned.

So far there has been no confirmation or denial from the government but considering that these are official documents, the leaks seem authentic. There have been no estimates of how much the government valued these assets for.

Radio Pakistan Assets Mortgage

Similar to the PTV mortgage, leaked documents state that all of Radio Pakistan’s assets in the country will be pledged to get loans.

More details have revealed that 61 Radio Pakistan buildings across the country have been valued at just Rs. 72 crore. Experts say that this amount is equivalent to the value of Radio Pakistan’s single building in Islamabad’s Red Zone let alone 61 buildings in premium areas across the country. Estimates price these assets at several times the valued amount.

By devaluing such a huge asset, it is the investors who are benefiting the most.

Another aspect questioned by the experts is that national radio holds the most importance in times of war and with matters heating up between India and Pakistan, we could lose an important national security asset if the government fails to return the loan on time.

Possible Consequences

Pakistan government has been taking these loans to fill exports gaps, increase foreign exchange reserves, meet budget requirements but more importantly to pay back previous loans.

Ishaq Dar is leading Pakistan to a debt-trap: Experts

When a government pays back loans by taking even more loans, it is usually a recipe for disaster. When commenting on this borrowing spree, local and foreign experts say that Pakistani Finance Minister is leading the country towards a “debt-trap”. This is a term experts use to explain such disastrous scenarios.

Pakistan can lose these assets if it fails to payback in time due to unforeseen circumstances

Moving on, this also means that Pakistan cannot pay back its loans at the moment mostly because of the lack of exports and tax collection. When the country cannot pay back loans, putting up national security assets as collateral for mortgage makes little sense.

Just imagine if Pakistan is late on any of the payments, and/or the situation with India worsens and results in a war, this could lead to Pakistan losing these assets to private institutions.

Issuing bonds is a good way to borrow money. However, mortgaging most of your vital installations like the biggest airport in the country, the national radio or TV or the central roads as collateral seems like a risky proposition to say the least. What if some issues occur and profits from these institutions cannot be used to pay back profits on the loans? The government would be in deep trouble if something like this happens.

Terrorist attacks or a war could put all profit returns burden on the government

Some analysts also question the use of Islamic Sukuk bonds for budget financing and then linking the returns with treasury bills, citing that it is forbidden and against Shariah laws. However, that is an altogether different debate for another time.

We just hope that our government(s), whether federal or provincial, find other means to improve the economy instead of issuing superficial claims based on such huge amounts of loans. With loans crossing reaching the $75 billion mark, we seriously need to put a stop to this before loans become unpayable and the country defaults.

Citations and Sources: Tribune 1, Tribune 2, Tribune 3, Dawn, Nation, 92 HD News

He is the Chief Content Officer at ProPakistani. Reach out at aadil.s[at]

  • Ha ha wohi PoTIan wali batein, yeh sub asad umar nay provide kia hoga.ha ha ha ha …………….us ko to sahi takleef hai pakistan ki tarakki say, KPK mein kuch kar nahin saktay, challein hain deengay marnay.

    • wah salam hai ap ki soch ko :p.. moter way se kon tarakee ker raha hai.. jitne me india mars per jata hai.. utne ki yahan twine cities k liye metro banti hai wo bhi bus :P. dunia bullet speed train per ja rahi hai hm bus ker :P

      • Do you know how much revenue is driven from just toll collection on the motorways? NHA has revenues of around 10.9 billion for the year 2016. Would that have come incase of no availability of road network, and the associated trading routes? Please enlighten further.

        • But alas we fail to see that ‘revenue’ being used for any useful aspects. Just building infrastructure while ignoring health and more importantly education sector, will bring nothing in the long term except maybe less traffic jams? We all can see in the news what is happening to the common man while new roads and orange this green that metro buses are being launched.

          • ik dafa visit karo govt hospital ap ko pata chalay koi upgradtion hoi k nahe. Media ap ko yeh zaroor dekhaiy ga ik mareez ke death ho gai zameen pai. Yeh nahe dekhaiy ga 1000 marezo k liay a.c chaltay hai 3 time khana milta hai. 100% medicine hospital say milti hai.i live 10 days in grw dhq for two times. And i know kia upgrade howa hai. Sab bura hai k raag laganay chor do.

            • Ap nay dus din guzaray hain hospital me idhr mje 5 saal honay walay hain Govt hospitals me. To trust me when I say this, our health institutions couldn’t be worse than this. Or perhaps they could be. Yep 3 times food is good, and you talk about AC? Not every govt hospital is equipped with ACs in every ward. Even when they are donated free ACs, nobody looks after them and I speak this from personal experience. The trash, the garbage, the breeding grounds of various diseases can be found in every nook and cranny of govt hospitals. Free food and cheap medicines don’t give us any excuse to ignore these issues. The state of the health sector can be much improved only if they are determined to do so. Ksi ek hospital me hazar mareezon k lia ac chl rha h to yay mtlb ni k baki sb hospitals ki halat bi esi h. Or education sector ka to wse hi bura haal h. Sb bura h ka raag lga rhe hain log to bura hi hga. Ankhon pr patyan bandhlain ab?

      • Ap jaisay logo ka tab pata chalta hai jab hours traafic jam mai phasay rehtay ho. Zindgi mai kabi metro mai safar kar k dekho pata chalay gareeb admi k liay kitni asani hoi hai. Apnay buzargo ko kisi sarkari hospital lay k jao aur pocho aaj say 10 saal pehaly hosptial kaisay thay aur aaj kaisay hai. Sarkari school compare karo un ke buildings aaj say 10 saal pehlay kaise thi aaj kaise hai. Ik dam say usa Europe jaisay halat nahe ho saktay. India mai dekho kitnay loog road pai sotay hai aur pakistan mai. I am not defending loans but ap ke soch ko salam kar raha ho. Ik dafa internal sind visit karo ap ko pata chalay tarqe hoi k nahe.

        • Soch ko aap ki bhi salaam hai. Education, heath aur dosre sectors tabah ho gae hain aur aap Metro main safar kr k khush hotay raho.

    • Motorway Kay north
      Motorway Kay south
      Motorway Kay east
      Motorway Kay west
      Awam bhooki/nangi hai!
      Isko aap tarraqqi kehtay hai?

    • What has PTI anything to do it with all this. Did they ask Ishaq Daar to mortgage all the state assets to get loans. What a foolish way of countering an argument by pointing fingers at the opponents.
      Leave PTI/PPP or any one else aside and educate us if these are false propaganda then correct us with the real facts and stats.

      Noon govt is running Pakistan economy as a mediocre business and not like a state economy should be run. How much brain one needs to understand this simple fact.

      • Well said sir, well said. But it is utterly useless to argue with these type of typical people.

      • real facts are that sukkuk bonds are interest free islamic lending bonds hence govt cannot pay interest on these, instead it gives a share of profit or theoretically loss of some institute/property/organization as agreed to bond buyer during bond life. Pakistan has just recently started issuing sukkuk while other like malaysia, saudi arabia, dubai etc have been doing it for years, malaysia for example had about 151 billion usd outstanding sukkuk at end of 2015 compared to pakistan’s 1 billion or whatever is the current figure.

        though i don’t know how many people consider sukkuk documents as klasra leaks in malaysia or dubai or saudi arabia etc or how many of their people fail to understand simple economic facts which our “har fun moola” media teaches us 24/7

    • Tere jese log is mulk ko bech kar dakar bhi nahi lenge. Is mulk ki fiqar karo ganje to loot kar Dubai ya Saudi Arabia Chale jaye ge, rehna to is mulk mein hum ne hai

      • Bai no tension ganjay idar he hai. Ap k leader nai jo election k liay biometric implement karwa lia hai facebook pay ap us k mazay lo. Aur ready ho jao next 5 saal b dandli ka rona ronay k liay.

    • Gullu League ka bas chaly tou woh mazar e quaid bhi girwi rakh day. Per pata nahi kis riyasat k welay Raja ho jo Gullu League ki chamcha giri sey hi farigh nahi ho. Gullu’istan k Raja tou nahi tum?

    • Waah kiya taraqi hay. Country is sinking everyday and blind patwaris are calling it taraqi.

  • God Forbidden, if same will persist few years more, no wonder, one day likely be Pakistan “Mortgaged”. I have witnessed the analysis of few intellectuals regarding this mortgage policy by current democratic (where nothing is for demos but all for demon Nawaz and Co) government. They have broken the records of their counterparts PPP (Billo and Co) in just 4 years (Ma sha Allah).

    • Beleave me agar opposition dharno ke bajai assembly mai hoti to yeh na hota. Jab chor koti milay ho gai to rokay ga kon. Mna talk shows aur dharno k liay nahe assembly k liay banaya tha. But waha janay ke zaroorat kia hai jab salary ghar bethay mil rahi hai.

    • Dont agree. Pakistan has been active in the capital markets for a reason and it has borne fruit. Look at borrowing levels which have dropped from more than 10% to 5.5%. The international investment community is giving a vote of confidence to Pakistan’s economy.

      • Much appreciated your input but borrowing in the year 2016 have rising trend, retrospect with the former years. Debt on each citizen has also exceeded over 100 thousand, inflation is also at its peak despite of decrease in oil prices while Pakistan rupee also got depreciated. Then how can one say economy is booming?

  • Noon league ke pass corruption ke ilawa kisi chees ka tazarba nahi ,mulk chalana inko nahi aata, lekin corrupt log corrupt ko hi pasand karte hai

  • Inaccurate article.

    Sukuk are not used for borrowing because Pakistan govt can not borrow without “mortgaging” assets as you put it. They are used to promote Islamic banking. Record shows Pakistan has consistently been able to borrow without “mortgaging” any assets at lower rates ever year.

    Second, Sukuk as a format requires an asset to back it to make it Islamic. The investors are not really interested in the underlying asset. If Pakistan defaults, will investors bring in people to run Karachi airport? Or motorway? Or PTV?!? How will they get the expertise? In war, Pakistan can always nationalize assets.

    Please research these things carefully before writing.

    • It is still borrowing whether you put it this way or that way.
      It wasn’t done to promote Islamic banking, it is because getting loans from institutions has become difficult because of the unbelievably high loan-GDP ratio.
      Not all loans mentioned above are sukuk bonds.
      No matter how you put it, the asset’s profits go to the investors as returns and failure to do so means the asset goes to the investors. You cannot claim that they are not interested in the asset otherwise the government could have used non-vital assets as well.
      You are assuming that Pakistani institutions are running on expertise. That’s a fallacy.
      Nationalizing assets? Now where would that put Pakistan in terms of foreign investments?

  • To all who are negative on Pakistan’s economy and future, please explain the following developments over the last 3 years:

    – Pakistan completed an IMF program for the first time in its history and IMF noted marked improvements in structural economy.
    – Moody’s have upgraded credit rating to B3 from Caa1
    – S&P has upgrade credit rating twice to B
    – International 5-year Bond borrowing rates for Pakistan have dropped from more than 10% in 2013 to 5.5% in end-2016.
    – Budget deficit has dropped from 8% range to around 4% in 2016
    – Growth rate is at a 6 year high
    – Independent agencies predict that with the pipeline of power projects currently in progress, about 4-5GW of extra capacity will hit the power system in 2018 which will essentially plug all the power shortfall of the country.

    P.S I am not a PML-N voter.

    • Jab “indepent agencies” corruption aur loot maar ki daastan batati hain to us waqt un pe yaqeen kyun nahi krte?

    • If you did that much research, you should probably make a search for how these factors improve.
      Point 1, 2 and 3- Depend on loan returns. Pakistan took more loans but in turn credit value improves as you return loans. IMF noted the same factors.
      Point 4 – 5.5% was still higher than the likes of Sri lanka and Vietnam which have worse credit ratings. So that is a loss not an achievement. Plus Pakistan got Eurobonds at 8.5%.
      Point 5 and 6 – Filling the gap in budget deficit by taking loans is no achievement. The government took over $55 billion in loans (foreign+local) in the first three-odd years, highest ever in its history.
      Please quote these “independent agencies” as the govt itself has claimed that electricity shortfall cannot be plugged by 2018. Not even an additional capacity of 12MW is enough to fill the supply and demand gap (which is continuously increasing).
      Plus I would also like to mention that Pakistan’s Loan to GDP ratio is in clear violation of the constitution which prevents it from going above 60%. The govt increased GDP targets to drop it t0 60%s. It over 70% now.

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