The government received $15.32 billion in fresh foreign loans from multilateral institutions and commercial banks during the previous fiscal year, up over 47 percent from $10.45 billion the year before.
According to the ‘Annual Report on Foreign Economic Assistance 2020-21’ that has been released by the Ministry of Economic Affairs, the incumbent government took loans worth $15.32 billion from numerous financial institutions while the total foreign loan repayments stood at $35.1 billion in the last three years.
The report detailed that Pakistan lost $8.41 billion in the fiscal year 2018-19, followed by $10.45 billion in 2019-20 (up 24 percent), and $15.32 billion in 2020-21. (up 47 percent). As a result, its external public debt was $85.6 billion by 30 June 2021, up from $77.9 billion on 30 June 2020, a net rise of around $7.7 billion (10 percent). The external public debt was $73.4 billion at the end of June 2019.
International commercial banks provided $4.66 billion (30 percent of the total). Project financing was contracted for $4.19 billion (or 27 percent of the total) while commodity financing was arranged for $952 million (or 6 percent of the total).
During the fiscal year 2020-21, energy and electricity were the top priority sectors for new loan agreements, accounting for 35 percent of the total committed project funding of $4.19 billion.
Rural development and social welfare came in second with a 23 percent share of the overall project funding, followed by governance (18 percent), finance and revenue (seven percent), education (five percent), agriculture (five percent), and transportation and communication (four percent).
Furthermore, the government borrowed $2.5 billion in Eurobonds from international capital markets and $1 billion as a deposit from the Chinese government’s foreign exchange and international trade agency, the State Administration of Foreign Exchange (SAFE). Multilateral development partners have set aside $2 billion (or 13 percent of the total pledges) for program finance to extend and expand the financial system, improve fiscal management, and strengthen the regulatory framework in order to boost Pakistan’s growth and competitiveness.
The World Bank emerged as the top multilateral development partner in terms of new commitments ($4.675 billion), followed by the Islamic Development Bank with $952 million, the Asian Development Bank with $902 million, and the Asian Infrastructure Investment Bank with $326 million.
Moreover, the report detailed that $6.97 billion in financing agreements were negotiated with multilateral development partners, $4.66 billion with foreign commercial banks, and $187 million with bilateral development partners out of a total of $15.32 billion in the new agreements that were inked in the previous fiscal year.
The report adds that a greater commitment was made during the previous fiscal year “to mitigate the pressure on the current account deficit, strengthen foreign exchange reserves, enhance external debt servicing capacity and provide requisite financing to water sector development”.
