Pakistan signed new agreements worth $11.362 billion as commitments during the first three quarters of the fiscal year 2021-22, inclusive of $2.484 billion with foreign commercial banks, as revealed by the Economic Affairs Division (EAD).
The division released the quarterly report on foreign economic assistance for July–March 2021-22, according to which the Government of Pakistan signed new agreements worth $11.362 billion as commitments including
- $2,484 million with foreign commercial banks
- $2,440 million with multilateral development partners
- $1,397 million with bilateral development partners
- $3,000 million as safe deposits
- $2,000 million committed as Eurobonds
Among the multilateral development partners, the following banks emerged as the largest partner in terms of new commitments to Foreign Economic Assistance (FEA) during the period under review:
- The Asian Development Bank (ADB) with $1,105 million (45 percent of multilateral partners)
- Islamic Development Bank with $1,014 million ($762 million in short term, and $252 million in long term)
- The World Bank with a commitment of $321 million (13 percent of multilateral partners).
New commitments are the amounts of FEA that have been committed by the development partners during the observed time and are likely to be disbursed in the next five to six years.
The new commitments are recorded by the EAD after the signing of the ‘financing instruments’ with the development partners. The EAD signs each instrument after rigorous consultations and negotiations with the stakeholders, including the Finance Division, the Law and Justice Division, and relevant sponsoring/executing agencies of federal or provincial governments.
Additionally, the foreign loans signed by the Finance Division are also recorded in the EAD’s database as ‘commitments’. The Finance Division raises funds from international financial institutions and capital markets as foreign commercial loans and through the issuance of Eurobonds/Sukuk to stabilize foreign exchange reserves and provide budgetary/balance of payments support.
Out of the total commitments agreed during July-March of FY 2021-22, $7,525 million (66 percent of the total commitments) was committed by international financial investors under bonds, commercial banks, and safe deposits to strengthen the foreign exchange reserves and stabilize the exchange rate.
While 17 percent of the commitments were earmarked for commodity financing followed by project financing with $1,275 million. An amount of $600 million was committed to program financing through the ADB to broaden and deepen the financial system, improve fiscal management, and bring financing sustainability to the energy sector to foster growth in Pakistan.
Disbursements of $11,935 million during July–March 2022 were mainly under the projects and programs loans/grants from multilateral, bilateral development partners, and financial institutions.
The composition of the disbursements is as follows:
- $3,949 million or 33 percent of the total disbursements were from the multilateral development partners, mainly the ADB, the World Bank, and IsDB;
- $2,623 million or 22 percent of the total disbursements were from foreign commercial banks;
- $2,000 million or 11 percent of the total disbursement were from international bondholders;
- $321 million or three percent of the disbursements were from bilateral development partners particularly Saudi Arabia, China, and the USA;
- $3,000 million or 25 percent of total disbursements were recorded under SFD Time deposits.
The government paid an amount of $9,436 million from July–March 2022 on account of debt servicing of external public loans. This consists of principal repayment of $8,137 million and interest payments of $1,299 million.