ISLAMABAD: Despite the International Monetary Fund (IMF) onboard, Pakistan received about $4.285 billion in foreign loans, less than one-fourth of the annual budget estimate in the wake of poor credit rating and adverse conditions in the global financial markets.

In its monthly report on Foreign Economic Assistance (FEA), the Economic Affairs Division (EAD) on Monday said the country received just $4.285bn in the July-November period of 2023-24 against its annual target of $17.6bn. This meant foreign inflow was down by more than 16pc when compared to $5.115bn in the same period last year which was a tough period given the challenging relationship with the IMF.

The lower inflows were mainly because of the adverse international environment and the country’s poor credit rating, making international capital markets a no-go area for Pakistan. Therefore, Pakistan has deferred its plan to launch a $1.5bn Eurobond because of higher interest rates in the international capital markets and the country’s low credit rating.

Caretaker Finance Minister Dr Shamshad Akhtar has already announced to have shelved conventional bonds for the current year even though a $1bn bond maturing bond in April 2024 would have to be repaid.

Pakistan gets just $4.2bn in July-November, despite IMF deal

The EAD report showed that besides the $1.5bn in fresh bonds, the government had also budgeted another $4.5bn in foreign commercial loans during the current fiscal year.

Total inflows recorded by the EAD in November stood at $416 million compared to $318m in October and $321m in September. Major FEA during the first five months flowed in at $2.89bn in July soon after Pakistan reached an agreement with the IMF for a fresh short-term programme.

This FEA is in addition to $1.2bn released by the IMF on July 13 as the first tranche of the $3bn Stand-By Arrangement (SBA) and $1bn by the United Arab Emirates that are separately accounted for by the State Bank of Pakistan (SBP). Thus, total foreign inflows including IMF and UAE amounted to $6.49bn.

Strangely, the EAD had accounted $1.16bn received from the IMF into its FEA inflows but did not depict similar $1.2bn inflows in July this year.

The EAD said that out of $4.285bn, the bulk of $3.06bn was received for budgetary support or programme loans and about $1.22bn as project aid.

Unlike previous years, Pakistan could tap only three major sources of foreign inflows during the last fiscal year and the trend continued in the first five months of the current fiscal year as well. These included bilateral and multi-lateral lenders and overseas Pakistanis through Naya Pakistan Certificates. This also showed that private commercial banks that had shied away in the absence of the IMF programme last year had not returned to Pakistan so far as inflows in the first five months remained zero against the full-year budgetary target of $4.5bn.

Of the multilaterals, the World Bank turned out to be the biggest lender with $491m disbursements in July-November followed by $120m from the Asian Development Bank and $100m from Islamic Development Bank. Asian Infrastructure Investment Bank (AIIB) disbursed $32m followed by $28m from Opec fund and $15.3m by the International Fund for Agricultural Development.

Published in Dawn, December 19th, 2023