ISLAMABAD: Pakistan’s foreign assistance inflows fell by more than 55 per cent to about $2.7 billion in the first four months (July-October) of the current fiscal year, apparently because of delays in securing a bailout from the International Monetary Fund (IMF) and subsequent $1bn disbursements. Last year, inflows had amounted to $6.05bn in these four months.

In its monthly report on Foreign Economic Assistance (FEA) released on Monday, the Economic Affairs Division (EAD) said against its annual target of $19.4bn, total FEA in July-October amounted to $1.72bn when compared to $3.85bn of the same period last year with the annual target of $17.6bn. This total doesn’t include about $1bn disbursed by the IMF on the last day of September, which is accounted for separately by the State Bank of Pakistan, thus putting the total inflows at $2.72bn.

Last fiscal year, the IMF had approved the nine-month $3bn Standby Arrangement and had released about $1.2bn in the first fortnight of July, helping Pakistan to put together a healthy tally of $2.9b in the month. In comparison, inflows in July this year struggled at just $436 million.

Pakistan realises just $2.7bn so far against an annual target of $19.4bn

In October, the EAD reported monthly inflows at $415m compared to $318m in the corresponding period last year.

The EAD said that out of $1.723m inflows in the first four months, about $897m was received for budgetary support or programme loans and the remaining $826 for project financing. During the same period last year, EAD had secured about $992m as project aid and more than $2.53bn as programme loans.

Of the total, inflows from multilateral stood at $721m in four months of this year compared to $597m last year, while bilateral disbursements stood at $260m against $436m last year.

The EAD reported receiving about $200m in foreign commercial loans in 4MFY25, showing a minor recovery from commercial banks that had stayed away from financing Pakistan last year. It may be noted that the government has budgeted $3.8bn in financing from foreign commercial banks for the current year, showing a poor start, again due to the delayed IMF umbrella.

The government has also targeted $1bn in international bonds for the current year. Another major projection worth $9bn inflows from bilateral partners -– China and Saudi Arabia -– targeted for the current fiscal year has also not materialised yet. Still, these are mostly realised in the second half of the fiscal year. These projections include a $5bn time deposit from Saudi Arabia and $4bn China’s SAFE deposit. These projections are critical for Pakistan to meet its external financing gap as part of the IMF programme.

In addition, Pakistan also received $542m inflows from overseas Pakistanis through Naya Pakistan Certificates compared to $306m in the same period last year.

The World Bank led the multilaterals with $364m disbursement in 4MFY25, slightly lower than its $370m releases last year, followed by the Islamic Development Bank with $150m and Asian Development Bank with $173m. Among the bilateral lenders, China stood out with $97m disbursements, followed by $90m from France and $38m from the United States.

Published in Dawn, November 26th, 2024