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Pakistan Received $10.62 Billion Foreign Loans During FY-2019-20

The country received $10.662 billion external inflows from multiple sources in the fiscal year 2019-20 against the budgeted estimates of $12.958 billion for the entire fiscal year which is 82 percent of the amount.

It does not include $2.826 billion received from International Monetary Fund (IMF), including $1.44 billion under the Extended Fund Facility (EFF) and $1.386 billion under the Rapid Financing Instrument (RFI).

According to the official data of the Economic Affairs Division (EAD), the external inflows during the corresponding period of 2018-19 were $10.595 billion which were around (109 percent) of the annual budgeted amount of $9.692 billion.

The gap between the budgetary target of around $13 billion and the actual inflows of $10.66 billion is primarily because the government was unable to issue Eurobonds of $3 billion in the international capital markets.

In the aftermath of COVID-19 and its persistence in the country, the disbursements of project aid from development partners dried up during the last quarter of the fiscal year 2019-20. The pandemic has closed down most of the economic activities across the country which also slowed development projects. However, ease in the lockdown by the government may lead to an increase in project financing in the coming months.

The government budgeted foreign assistance of $12.957 billion for the fiscal year 2019-20 including $2 billion foreign commercial loans. The data revealed that the government has procured $3.373 billion from foreign commercial banks in 2019-20 compared to $4.097 billion during 2018-19 — around 32 percent of the total external loans of $10.662 billion procured during 2019-20.

According to EAD, the total receipt of $10.662 billion constitutes $4 billion or 37 percent as program/budgetary support assistance from Asian Development Bank and World Bank, $3.373 billion (32 percent) foreign commercial borrowing and $1.694 billion (16 percent) project assistance, and the remaining $1.583 billion (15 percent) were received for commodity financing.

Under the head of borrowing from foreign commercial banks, Bank of China disbursed $500 million, Dubai Bank $1.127 billion, Ajman Bank $229.76 million, the consortium-led by Suisse AG, UBL and ABL $205 million, Citibank $148.19 million, China Development Bank $1.7 billion and Standard Chartered Bank (London) $26.50 million.

The bilateral and multilateral development partners have disbursed $6.521 billion of foreign economic assistance during the last fiscal year 2019-20 against the budgetary allocation of $4.758 billion for the fiscal year 2019-20.

Amongst the multilateral development partners, ADB provided $2.824 billion including the ADB’s budgetary support loans amounting to $2.3 billion to address fiscal imbalances, ensure macroeconomic stability, and secure financial sustainability in the country. Islamic Development Bank disbursed $815 million under the oil credit facility out of $1.1 billion budgeted for the fiscal year 2019-20.

World Bank disbursed $1.376 billion against the budgetary allocation of $1.163 billion. Among bilateral sources, the leading donors were China ($487 million), UK ($128 million), Korea ($96 million) and USA ($75 million). Saudi Arabia has given $768 million worth of oil against the annual credit facility of $3.2 billion.

According to EAD during July– May 2019-20 total servicing of external public debt was $8.976 billion against the annual repayment estimates of $10.423 billion for the entire fiscal year. Of which, $7.361 billion (82 percent of total external public debt servicing) was repaid as principal and $1.615 billion (18 percent) as interest on the outstanding stock of external public debt.

During the first eleven months of the last fiscal year 2019-20, the government settled $3.712 billion worth of foreign commercial loans and repaid $1 billion worth of international Sukuk issued in December 2014. Further, the government has also repaid $1.923 billion to multilateral and $725 million to bilateral development partners. For the period July-May, 2019-20, net transfers to the government were ($986) million.

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