ISLAMABAD: Pending approval of the $7 billion bailout by the IMF’s executive board, the government made a poor take-off and received just $436.4 million in foreign assistance and grants in July, almost 85pc lower than the same month last year.

The $426m in foreign loans and $10.5m in grants in the first month of the current fiscal year appeared a non-starter when seen in the context of the mammoth $19.4bn target for the foreign assistance set for FY25 — even higher than last year’s $17.4bn target that was missed by $7.6bn.

In July last year, Pakistan realised over $2.89bn mainly because of signing the 9-month $3bn Stand-By Arrangement (SBA) with the IMF. As a result, Pakistan secured a major injection of $2bn in time deposits from Saudi Arabia. Total inflows in July 2023 amounted to $5.1bn, including $1.2bn from the IMF and another $1bn from the UAE.

On Tuesday, the Ministry of Economic Affairs said it had received $436.39m in total foreign inflows com­­­­­pa­red to $2.89bn in the same month last year. It said the total foreign economic assistance for 2024-25 stands at $19.393bn, including grant estimates of $176.3m. The EAD said that out of $436m inflows, the bulk of $307m were received as project financing compared to $640m of July last year, showing a decline of almost 52pc.

Disappointing inflow of $436.4m may complex Pakistan’s debt challenges

Against a full-year target of $4.53bn from multilateral lending agencies (excluding IMF), Pakistan got $201m in July, slightly higher than $194m in July last when the target for the year was $5.34bn.

Total inflows from bilateral (other than three strategic friendly lenders) in the first month of the year amounted to $108m against a full-year target of $523m. In comparison, the authorities secured $114m in July 2023 against the yearly target of $882m. Another $128m was received from Naya Pakistan Certificates.

The full-year $19.39bn target for the current fiscal year includes $5.05bn from multilateral and bilateral lenders, $1bn in international bonds, $3.8bn foreign commercial loans, $5bn time deposit from Saudi Arabia and $4bn safe deposit from China.

In addition, the government expects about $465m inflows through Naya Pakistan Certificates from overseas Pakistanis and $100m from ECO Trade Bank.

In 2022-23 as well, the government had budgeted $22.8bn foreign assistance but could materialise $10.8bn throughout the year — just 46pc of the target — because of the suspension of the IMF programme, leaving a $11.8bn slippage, resulting in depletion of foreign exchange reserves.

Published in Dawn, August 28th, 2024