ISLAMABAD: Without the IMF umbrella, Pakistan’s external financing pipeline appeared drying up as it received 38 per cent lower inflows — only $8.1 billion in the first 10 months (July-April) of the current fiscal year against over $13bn in the same period last year.

The pace of dwindling inflows could also be seen from the fact that $8.1bn receipts in 10 months of this fiscal year stood at just 35.5pc of the $22.8bn full-year budget target — implying a constant precarious position of the foreign exchange reserves despite tight import curbs.

The foreign assistance so far suggests the annual target would be missed by a wide gap. In April alone, Pakistan received only $359m, down 57pc when compared to $842m in November 2022.

In its monthly report on Foreign Economic Assistance (FEA), the Ministry of Economic Affairs said it received about $8.1bn foreign assistance in 10 months (July–April) compared to $13.03bn in the same period last year. As such, the total inflows at $8.1bn in the first 10 months amounted to just 35.5pc of the budget estimates of $22.817bn for the whole fiscal year. Last year (2021-22), the first 10-month inflows of $13.03bn accounted for 93pc of the annual budget estimates of $14.1. The MEA had finally reported the full fiscal year foreign economic assistance at $16.975bn in 2021-22.

Full-year target of $22.8bn to be missed by a wide margin

The foreign inflows reported by MEA also include expensive foreign debt in Naya Pakistan Certificates from overseas Pakistanis that stood at $677m. This was also 60pc lower than a full-year target of $1.63bn.

Unlike previous years, there were only three major sources of foreign inflows including $4.135bn from multilateral lenders followed by $1.243bn from bilateral lenders and only $900m from commercial banks against a budget target of $7.5bn. This also showed that private commercial banks were shying away in the absence of IMF programme and rock-bottom reserves.

The 4th usual source — international bonds — had dried up because of poor credit rating amid external account challenges and resultantly historically low foreign exchange reserves. The government had targeted $2bn in international bonds for the current fiscal year but no funds could be raised in 10 months.

Of the multilateral, the Asian Development Bank turned out to be the biggest lender with $1.975bn loan disbursements in 10 months followed by $1.32bn from the World Bank and then $1.166bn from the International Monetary Fund whose subsequent disbursement ($1.17bn) planned for the first week of November could not materialise because of differences with the authorities over the completion of 9th review. The government had targeted $3bn inflows from the IMF during the current fiscal year.

The ADB’s disbursements, however, increased by over 26pc to $1.975bn in 10 months when compared to $1.45bn in the same period last year. The World Bank group disbursed about $1.32bn in 10 months compared to its $1.19bn loans during the same period last year. The Beijing-based Asian Infra­struc­ture Investment Bank (AIIB) followed with $550m disbursements this year so far, up drastically from just $38.8m in the corresponding period last year. The Islamic Development Bank also extended about $177m including $161m in short-term financing.

Among the bilateral lenders, Saudi Arabia extended about $982m under the oil facility in the first 10 months this year against just $201m in the same period last year. This was followed by China with $127m, up from $153m last year.

The loans from commercial banks were down to just $900m this year compared to a massive $2.6bn of the first 10 months of last fiscal year.

The report said the government received $5.34bn worth of inflows for budgetary support and $1.14bn of short-term credit. This put the total non-productive (non-project) assistance at $6.497bn in 10 months (out of total inflows of $8.2bn) against the full-year target of $22.8bn.

About $1.625bn disbursements were secured this year for various foreign-funded projects compared to $1.95bn in the same period last year, down by about 17pc.

Published in Dawn, May 19th, 2023

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