ISLAMABAD: Pakistan’s foreign loan inflows have jumped by almost 45 per cent to about $4.5 billion in first five months (July-November) of the current fiscal year as compared to the corresponding period in the last fiscal.

With the loans taken in the five months, the country has received a total of about $23.6bn in foreign loans during tenure of the Pakistan Tehreek-i-Insaf government (since July 1, 2018), according to data on Foreign Economic Assistance compiled by the Ministry of Economic Affairs.

The ministry said on Thursday “the government has received $4.499bn total external inflows from multiple financing sources” during July-November of fiscal year 2020-21. This amounted to 37pc of the annual budget estimates of $12.233bn for the entire FY2020-21, it added.

In the corresponding period of fiscal year 2019-20, the external inflows stood at $3.108bn, which was around 24pc of the annual budgeted amount of $12.958bn.

Govt has received a total of about $23.6bn in foreign loans since July 1, 2018

Last week, the ministry reported that Pakistan had received a total of $10.7bn during FY2019-20 and $8.4bn during FY2018-19.

Since the outbreak of Covid-19 the disbursements for project financing from development partners had slowed down, the ministry said, adding that the pandemic had resulted in most economic activities, including work on development projects, coming to a halt.

However, after easing of pandemic-related restrictions by the government the economic activities are being revived, which may lead to an increase in project financing in the current fiscal year (2020-21).

Giving a breakdown of the $4.499bn foreign loans, the ministry said about $1.3bn, or 29pc, pertained to programme loans/budgetary support, mostly from multilateral lenders, to help restructure Pakistan’s economy. About $1.621bn, or 36pc, was foreign commercial borrowing to repay maturing foreign commercial loans, it said.

In addition, $518 million, or 12pc, was received as project financing for development activities, presumably for improving the socio-economic development of the country and asset creation. Another $60m, or 1pc, was short-term credit while $1bn, or 22pc, was received in terms of time safe deposits during the current fiscal year.

The bilateral and multilateral development partners disbursed $1.878bn of foreign economic assistance during July-November of the ongoing fiscal year against the budgetary allocation of $5.811bn for fiscal year 2020-21 on concessional terms with longer maturity.

Among the multilateral development partners, the Asian Development Bank provided $712m and the World Bank disbursed $694m against the budgetary allocation of $2.257bn. From bilateral sources, France, the US and China provided $33.4m, $63.8m and $21.8m, respectively.

During July-October of 2020 total servicing of external public debt was $2.45bn against the annual repayment estimates of $10.363bn for the entire fiscal year. Of this, $2.035bn (83pc of total external public debt servicing) was repaid as principal and $415m (18pc) as interest on the outstanding stock of external public debt.

During July-October of 2020-21, the government settled $1.295bn worth of foreign commercial loans. Similarly, the government also repaid $695m to multilateral and $102m to bilateral development partners.

Considering the foreign exchange constraints, financing of development projects and repayments of these huge external public debts compelled the incumbent government to further borrow from multiple sources, the ministry said.

For the period July-October of 2020-21, net transfers to the government were $144m, as external loan inflows stood at $2.179bn against total outflows of $2.035bn in the same period. Positive net transfers came mainly due to higher inflows from multilateral lending agencies. Interestingly, the stock of external loans which were obtained on market rates decreased by $618m and the share of concessional external loans with longer maturity increased by $761m.

As of June 30 this year, Pakistan’s total external public debt amounted to $77.9bn, compared to$73.4bn in the same period last year, showing a growth rate of 6pc. The total external public debt came from three key sources — 51pc from multilateral debt, followed by 31pc in bilateral debt, including China’s safe deposits, and remaining 18pc from foreign commercial banks and institutions, including Eurobonds and Sukuk.

Published in Dawn, December 18th, 2020