ISLAMABAD: The net equity inflows remained strong for Pakistan, and rose to $2.6 billion in 2014 against $1.6bn in 2013, according to the 2016 edition of ‘International Debt Statistics’ by the World Bank.

The rise in equity inflows reflects rising Chinese investment in large-scale infrastructure projects.

On the other hand, net debt flows to Pakistan jumped to $5.2bn, from an outflow of $0.07bn in 2013 as a consequence of the $3.6bn repayment to the International Monetary Fund (IMF).

Net financial flows to South Asian countries, excluding India, rose 24 per cent in 2014 to $18.5bn, on account of a 23pc increase in net debt flows and a 25pc jump in net equity inflows, principally from portfolio equity that more than doubled. Net debt flows accounted for 71pc of net financial flows to the group in 2014, similar to the share in 2013.

The debt report says net financial flows to the South Asian region rose 2pc in 2014 with the rise in net debt flows and foreign direct investment, 7pc and 17pc, respectively, largely offsetting the 33pc fall in portfolio equity flows.

Private creditors accounted for the majority of debt flows, 93pc in 2014, and again directed primarily at India.

The 33pc rise in long-term debt from private creditors in 2014 to $57bn was accompanied by an important change in composition.

Whereas in 2013, bulk of these inflows came from commercial banks, in 2014 they were mainly in the form of bonds. This was a consequence in part of the return to international bond markets by Pakistan and Sri Lanka in 2014.

The ratio of external debt stock to GNI for the region (24pc in 2014), and the ratio of external debt stock to exports (104pc) was broadly in line with those of 2013.

Statistics show that net external debt inflows to developing countries fell 18pc in 2014, driven by a sharp 60pc contraction in short-term debt inflows. FDI proved resilient and portfolio equity flows were robust bringing net financial flows (debt and equity) to $1.1 trillion in 2014.

Net debt inflows from multilateral creditors rose 29pc to $31bn, more than double those from bilateral creditors. The driving force was the 24pc rise in debt inflows from the World Bank (IBRD and IDA) with low and middle-income countries in Sub-Saharan Africa and South Asia the principal beneficiaries.

Data shows the total debt outstanding to low-and middle-income countries rose 7pc in 2014, compared with an 11pc increase recorded in 2013, and driven largely by 5pc compared with 15pc in 2013.

The combined stock of external debt of low-and middle-income countries rose from $5.1tr in 2013 to $5.4tr at the end of 2014.

The net dent flows totaled $464bn in 2014, 18pc lower than the comparable figure for 2013, driven almost entirely by a 62pc drop in net short-term debt flows, which fell to $72bn against $188bn in 2013.

Net debt inflows from official creditors, including IMF, were $44bn, up over 50pc from their 2013 level, but as a share of total net debt inflows, it remained small.

Published in Dawn, December 19th, 2015