ISLAMABAD: Pakistan’s external public debt rose by $1.2 billion in six months to $86.358bn as of September 30, 2023, according to the Ministry of Economic Affairs (MEA).

In its first quarterly report on Foreign Economic Assistance (FEA) of the current fiscal year released on Wednesday, the ministry said Pakistan had received total foreign inflows of $3.5bn in July-September 2023 against loan repayments of $1.5bn, resulting in a net inflow of $1.97bn.

Around 64 per cent of the total external public debt was obtained from multilateral and bilateral sources having concessional terms and longer maturity, the MEA added.

“As of September 30, 2023, the total external public debt of the government was $86.358bn,” it said. The external public debt as of March 31, 2023 amounted to $85.18bn.

In comparison, the country had received $2.2bn in loans and repaid $2.06bn during the same period last fiscal year (July-September 2022), leading to net addition of $142 million.

Pakistan received $3.5bn inflows in July-Sept 2023, repaid $1.5bn

The FEA report said Pakistan had signed new agreements worth $642m in fresh commitments during the first quarter of the year and all new commitments had been funded by multilateral development partners as international bonds and commercial loans could not be secured in view of adverse market conditions following poor credit rating and resultantly unaffordable interest rates.

Out of these $642m commitments, 69pc was for project financing, only 15pc as programme financing, and 16pc as commodity financing as top priority was for securing financing for mitigation of the devastating effects of 2022 floods.

During July-September 2023-24, disbursements of $3.538bn were mainly under the project and programme loans and grants from multilateral development partners, bilateral development partners and financial institutions.

This $3.538bn FEA is in addition to $1.2bn released by the International Monetary Fund (IMF) on July 13 as first tranche of the $3bn Stand-By Arrangement (SBA) and $1bn by the United Arab Emirates that are separately accounted for by the State Bank of Pakistan.

The World Bank ($306m) and Islamic Development Bank ($100) were amongst the largest contributors among multilateral development partners.

On the bilateral side, China emerged as the primary contributor to the total disbursements during the period disbursing $509m, followed by $300m from Saudi Arabia for import of oil and petroleum products.

The FEA report said Pakistan paid $2.404bn during the first quarter of the current fiscal year on account of debt servicing of external public loans. Of this, principal repayments were $1,627m and interest payments $777m. Thus, the net transfers to the government’s external public debt resulted in a positive balance, amounting to $1.869bn.

Of the total $3.54bn public debt inflows, $2.204bn (62pc) was obtained either for balance of payment or budgetary support. This included $2bn worth of safe time deposit, followed by $817m in bilateral financing and $474m of multilateral support, excluding the IMF, that are accounted separately by the State Bank.

Another $204m was received in Naya Pakistan bonds.

During the first quarter (July-Sept 2023-24), the disbursed amount in the shape of programme financing, project financing, commodity financing, and budgetary support helped the government support economic reforms, execute development activities and provide support to its balance of payments position, the report said, adding that a significant share, i.e. 64pc of the total external public debt, was secured on concessional terms with extended maturities.

Giving a sectoral breakdown, the MEA said the share of disbursements under floods stood at $101m, followed by $64m for energy and power, $52m for water sector, $34m for transport and communication, $29m for health and nutrition, $25m for agriculture and $22m for physical planning and housing in the total project assistance.

Published in Dawn, March 7th, 2024