Monday October 02, 2023

Inability to strike deal with IMF: 40pc decline in foreign loans in 9MFY23

By Our Correspondent
April 20, 2023

ISLAMABAD: Pakistan has secured total foreign loans of $7.7 billion in the first nine months (July-March) of the current fiscal year as against $12.7 billion in the corresponding period of the last financial year, registering a 40 percent decline.

Saudi Arabia stands at the top, providing $782.82 million in the shape of an oil facility. Saudi Arabia also disbursed $100 million in the shape of project financing during the current financial year.

Islamabad’s ability to generate dollar inflows in the shape of loans and grants has shrunk significantly as the government could only secure $7.7 billion in the first three quarters (July-March) out of total projections of $22.8 billion. This clearly indicates that the government could secure just peanuts in the shape of dollar inflows mainly because of its inability to strike a deal with the IMF and revive the stalled Fund programme as well as undertaking donor-funded projects in an effective manner.

According to official figures on the disbursement of loans and grants, Pakistan has obtained $4.02 billion from multilateral creditors in the first nine months of the current fiscal year including $1.94 billion from the Asian Development Bank (ADB), $546.7 million from the Asian Infrastructure Investment Bank (AIIB), $1.1 billion from the World Bank’s IDA loan, $146.9 million from the WB’s IBRD loan, $38.4 million from IFAD, $16.81 million from IsDB, $161 million IsDB (Islamic Development Bank) for short term, etc.

Bilateral donors provided $1.06 billion during the July-March period of the current financial year. The USA has disbursed $24 million, Japan $34 million, France $29 million, China $54 million and Korea $21.31 million. The government has so far been able to generate $900 million through commercial loans in the first nine months against official projections for generating commercial loans of over $7 billion. The inability to strike a deal with the IMF has compromised the capacity of the government for raising commercial loans in the current fiscal year.

The IMF disbursed $1.16 billion and the government raised $612.3 million through the Naya Pakistan Certificates in the current fiscal year. The government could not get any amount through the launch of international bonds in the ongoing financial year.