Connect with us

Hi, what are you looking for?

Economy

Pakistan received 17 Billion in loans in FY22 and paid back $12.4 billion: MEA Report

As of 30th June 2022, the total external debt of the government was USD 88,836 million. Around 70% of the total external public debt was obtained from multilateral and bilateral sources having concessional terms and longer maturity

Pakistan Received 17 Billion In Loans In FY22 And Paid Back $12.4 Billion: MEA Report:

Pakistan Received 17 Billion In Loans In FY22 And Paid Back $12.4 Billion: MEA Report

ISLAMABAD: In the financial year 2021-22, Pakistan received about $17 billion in foreign loans while the country returned $12.4 billion in external loans during the last fiscal year.

From July 2021 to June 2022, disbursements of USD 16,974 million were mainly under the project and program loans/grants with ADB, World Bank, and IsDB being the largest contributors among multilateral development partners. In bilateral, China was the largest contributor to total disbursements in the specified time.

The Ministry of Economic Affairs has reported this in its annual report on Foreign Economic Assistance for July 2021 to June 2022, released on Jan 10, 2023.

Dollar Background

The energy & power sector received the largest share of disbursements, i.e. 26% of the total. External financing is an important source for developing countries including Pakistan as it can be productive for the economic growth of such countries. External debt is the total external debt owed by the country, whereas, external public debt is the total external debt owed by the government.

According to the report, as of 30th June 2022, Pakistan’s total external public debt amounted to USD 88.84 billion. The Government paid USD 12,378 million during the FY 2021-22 on account of debt servicing of external public loans. Of this, principal repayments were USD 10,355 million and interest payments were USD 2,023 million. Furthermore, the net transfers of the Government’s external public debt were USD 6,380 million.

Foreign Economic Assistance (FEA), the report said, is the aid that promotes the economic development and welfare of developing countries, provided bilaterally or through multilateral agencies. The main purpose of FEA is to provide relief and assistance to developing economies in minimizing fiscal imbalances and promoting growth and development. The purpose of this report is to highlight the FEA received by the Government of Pakistan from bilateral and multilateral development partners from July 2021 to June 2022, both loans and grants.

In terms of new commitments, the Government of Pakistan signed new agreements worth USD 15,722 million in the FY 2021-22. These commitments were composed of Eurobonds, Time deposits from Saudi Arabia, and multilateral & bilateral development partners. Out of these commitments, 62% was committed by international financial investors under bonds, commercial banks, and time deposits to provide support to the budget, strengthen the foreign exchange reserves and stabilize the exchange rate, 16% as project financing, 14% as commodity financing, and 8% as program financing. In FY 2021-22, financing for the procurement of the Covid-19 vaccine was the key priority of the Government.

Out of the total commitments agreed during Jul – Jun of FY 2021-22, USD 9,763 million (62% of 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 16% of the commitments were earmarked for project financing followed by commodity financing with USD 2,133 million (14% of total), an amount of USD 1,278 million was committed for program financing through ADB to broaden and deepen the financial system, improve fiscal management and to bring financing sustainability in the energy sector to foster growth in Pakistan.

During the period under review, the Government committed USD 2,547 million as project financing for the procurement of Covid-19 vaccines, Energy/Power, Education and Training, Social Welfare, Water, and Health & Nutrition Sectors of the economy. The sectoral composition of the new commitments reflects the priority development objectives of the Government and it illustrates that financing for the procurement of the Covid-19 vaccine was the key priority of the Government during the FY 2021-22 committing USD 573 million. Similarly, USD 447 million has been committed to Energy/Power Sector followed by water USD 183 million, Education & Training Sector USD 149 million, Social Welfare USD 149 million, and Health & Nutrition USD 25.26 million. An amount of USD 1,012 million has been committed by China.

Disbursements of USD 16,974 million during July 2021 – June 2022 were mainly under the projects and programs loans/grants from multilateral, bilateral development partners and financial institutions. Details show that around USD 4,828 million (28% worth of disbursement) came from multilateral development partners. Amongst multilateral development partners, ADB, World Bank, and IsDB were the largest development partners with disbursements of USD 1,626 million, USD 1,586 million, and USD 1,406 million (10%, 9%, and 8% of total disbursements) respectively. On the bilateral side, China disbursed the largest amount of USD 1,685 million followed by Saudi Arabia with USD 401 million.

The FEA is mainly received in the shape of program financing, budgetary support, project financing, and commodity financing. During the period under review, 59% of the total disbursements were obtained for Balance of Payments/ Budgetary support which comprises bonds worth USD 2,000 million, commercial financing of USD 4,873 million, and time deposits of USD 3,000 million, which have been arranged to strengthen foreign exchange reserves and stabilize the exchange rate. In the same way, 21% of the disbursements were obtained under project financing followed by program financing of USD 1,765 million and commodity financing of 1,727 million.

The sectoral composition of project assistance is summarized as follows: During FY2021-22, the largest share of disbursements i.e. 26% of the total amount was received in the Energy & Power sector (USD 931 million), followed by Transport & Communication (7%), Agriculture (5%), Governance, Research & Statistics (4%), and Education & Training (3%) in the total project assistance; On the other hand, 16% of the total project assistance was received for Covid-19 financing needs, amounting to USD 559 million.

As of 30th June 2022, the total external debt of the government was USD 88,836 million. Around 70% of the total external public debt was obtained from multilateral and bilateral sources having concessional terms and longer maturity.

Javed Mahmood
Written By

I am an experienced writer, analyst, and author. My exposure in English journalism spans more than 28 years. In the past, I have been working with daily The Muslim (Lahore Bureau), daily Business Recorder (Lahore/Islamabad Bureaus), Daily Times, Islamabad, daily The Nation (Lahore and Karachi). With daily The Nation, I have served as Resident Editor, Karachi. Since 2009, I have been working as a Freelance Writer/Editor for American organizations.

Latest Updates

Babar Azam, the captain of Pakistan’s cricket team has become embroiled in a scandal after some of his ostensibly personal videos and photos went...

Economy

ISLAMABAD: Pakistan’s renowned economist and former finance minister Dr Hafeez Pasha today said that the value of Pakistani currency can fall to Rs 295...

Entertainment

Bollywood super star Priyanka Chopra has appreciated Saim Sadiq’s movie Joyland. The movie has been shortlisted for Oscar Award. Priyanka, who often irks many with...

Latest Updates

KARACHI: The poll watchdog on Wednesday issued a brief statement amid mounting pressure from the contending parties allegations regarding irregularities surrounding the Jan 15...