ISLAMABAD: Buoyed by the IMF stimulus, Pakistan’s foreign financing inflows rose by more than 27 times to $5.1 billion in July compared to less than $186 million a year ago, official data showed on Monday.

In its monthly report on foreign economic assistance, the finance ministry’s Economic Affairs Division said total foreign economic assistance in July amounted to $2.89bn compared to just $185.6m of the same month last year, showing an increase of 1,454 per cent.

This was in addition to $1.2bn released by the International Monetary Fund on July 13 as the first tranche of the $3bn Standby Arrangement (SBA) and $1bn by the United Arab Emirates, which are separately accounted for by the State Bank of Pakistan.

The bulk — $2bn — of foreign loans reported by the Economic Affairs Division came from Saudi Arabia’s time deposit, followed by a $508m guaranteed loan to Pakistan Air Force by China National Aero-Technology Import and Export Corporation.

External debt slightly dips to $85bn by end of March

The remaining inflows in July included $194m from multilateral agencies and $114m from bilateral lenders. Another $75m flowed in from overseas Pakistanis in Naya Pakistan Certificates.

The government has estimated about $17.62bn in foreign assistance in the budget for the current fiscal year, including $17.39bn in loans and the remaining $235m in grants. Total loan disbursements in July stood at $2.88bn and grants at $14.4m.

The division said that out of the $2.89bn inflows, the bulk of $2.08bn were received for budgetary support or programme loans and about $640m as project aid.

For the previous fiscal year (2022-23), the government budgeted $22.8bn in foreign assistance but could actually materialise $10.8bn throughout the year — only 46pc of the target — because of the suspension of the IMF programme. This $11.8bn slippage resulted in the depletion of foreign exchange reserves.

Mainly because of this, the country’s total external public debt slightly declined to $85.2bn by the end of March this year from $86.56bn by the end of 2022, the Economic Affairs Division said in its quarterly report for the January-March quarter.

Of the total external public debt of $85.18bn, the government owed $64bn to multilateral and bilateral development partners, including the IMF, which meant more than three-quarters of the total external public debt was on concessional terms with a longer maturity.

Besides, 16pc (or $13.5bn) of the total external public debt was from international capital markets and foreign commercial banks, and 7pc ($7bn) constituted deposits from friendly countries like China and Saudi Arabia.

The division said net transfers to the government in July-March were negative by $3.349bn, which meant the government had to pay more than the acquisition of new loans.

More specifically, the government during July-March could acquire $900m in loans from foreign commercial banks and repay $4.542bn. However, net transfers from multilateral development partners were up $1.468bn, which reflected an improvement in the composition of external public debt as funds from multilateral development partners are concessional and have a longer maturity.

The report said the government paid $12.92bn during July-March on account of debt servicing of external public loans. This consisted of principal repayment of $10.84bn and interest payments of $2.09bn.

In the same period last year, the government paid $9.44bn, including principal repayment of $8.14bn and interest payments of $1.3bn.

Published in Dawn, August 22nd, 2023