ISLAMABAD: The Ministry of Economic Affairs (MEA) on Thursday said Pakistan made a net addition of $4.77 billion in the first half (July–December 2021) of the current fiscal year to its total external public debt of $90.6bn.

In its quarterly report on Foreign Economic Assistance (FEA) for July-December 2021, the MEA said the total external loan inflows during the first half of the year amounted to $8.972bn against loan outflows of $4.2bn, thus making a net addition of $4.772bn.

“As of Dec 31, 2021, Pakistan’s total external public debt stood at $90.6bn,” said the quarterly report.

It said that during the first half of FY22, the government of Pakistan signed new loan agreements worth $8.481bn as commitments. These included $2.484bn worth of agreements with foreign commercial banks, $1.956bn with multilateral development partners, $3bn as safe deposits, $1bn committed as Eurobonds, and another $1bn from the international capital markets through tap-issuance.

Among the multilateral development partners, the Islamic Development Bank (IsDB) topped the list with $834 million ($762m as short term and $72m as long term), followed by the Asian Development Bank with $800m (40pc of multilateral partners) and the World Bank with 16pc of multilateral partners.

From July to December of FY22, $7.545bn (or 89pc of total commitments) were set aside for programme financing via foreign commercial banks and Eurobonds to broaden and deepen the financial system, improve fiscal management, and strengthen the regulatory framework in order to promote growth and competitiveness in Pakistan. A total of $894 million (or 11pc of total commitments) was set aside for project financing.

The report said the actual disbursements (against both old and new commitments) stood at $9.131bn during the period and were mainly under the projects and programmes loans and grants from multilateral and bilateral development partners and financial institutions.

The disbursements included $2.907bn or 32pc from multilateral development partners, primarily ADB, World Bank, and IsDB, followed by $2.03bn or 22pc from foreign commercial banks, $1bn or 11pc from bonds, $3bn or 33pc in safe deposits from friendly countries, and $150 million or 2pc from bilateral lenders such as China, the United States, and the United Kingdom.

The government paid an amount of $5.039bn during July–December 2021 on account of debt servicing of external public loans. This consists of principal repayment of $4.2bn and interest payments of $839m.

The FEA is mainly received in the form of programme financing, budgetary support, project financing, and commodity financing. During the review period, programme financing accounted for 57pc of total disbursements, with the goal of broadening and deepening financial systems, improving fiscal management, and strengthening the regulatory framework in order to promote growth and competitiveness in Pakistan.

An amount of $2.031bn (or 25pc of the total) was obtained from foreign commercial banks and 1.506m (or 18pc of the total) as project financing. The remaining $26m of the disbursements were received under the Kerry Lugar Programme.

Published in Dawn, May 13th, 2022

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