Total foreign loans rise to $2.8bn in July

ISLAMABAD: With the provision of additional $2 billion time deposits from the Kingdom of Saudi Arabia (KSA) and $508 million as a guaranteed loan from China for Pakistan Air Force to inject "Dragon" multirole fighter aircraft Pakistan’s total foreign loans jumped up to $2.8 billion during the first month (July 2023) of the current fiscal year.

These two major foreign loans have pushed up the foreign loans up to $2.8 billion in July 2023 against a meager foreign loan of $185 million in the same month of last year 2022. Pakistan also received $100 million from KSA in the shape of oil facility in July 2023.

All these dollar inflows helped Islamabad to jack up its foreign exchange reserves held by the State Bank of Pakistan (SBP). Under the IMF programme, there is a limit related to overall guarantees so the government has to keep the overall guarantees within the envisaged limits agreed with the IMF under $3 billion SBA programme. Pakistan has also provided another $3 billion guarantee for Chashma-5 nuclear power project but the ECC had also decided to incorporate it in phases in order to keep the guarantees within the agreed limit of the IMF programme.

Against the total envisaged target to fetch $17.3 billion in the whole financial year from all multilateral and bilateral creditors in the financial year 2023-24, the first month (July 2023) brought substantial dollar inflows after getting $2 billion from the KSA in the shape of additional deposits in the aftermath of striking new programme with the IMF under $3 billion Standby Arrangement (SBA).

In the same month of the last financial year, Pakistan could fetch only $185 million because, at that time in July 2022, Islamabad was facing difficulty in completing of 6th and 7th reviews of the IMF programme under the Extended Fund Facility (EFF). Finally, the EFF had revived in August 2022 but then it remained suspended and finally accomplished without achieving success on June 30, 2023.

Then Pakistan and IMF have struck new programme under $3 billion SBA for nine months period after which dollar inflows restored from major bilateral partner especially from Kingdom of Saudi Arabia as the country received additional $2 billion time deposits. So, the total deposits from the KSA touched $5 billion.

According to disbursement details of Economic Affairs Division (EAD) showing that Pakistan received guaranteed loan (CATIC) for PAF to the tune of $508.34 million in July 2023. Pakistan has received $193 million from all other multilateral creditors during July 2023 including $22.59 million from ADB, $11.74 million from AIIB, $82.71 million from WB’s IDA loan, $3 million from WB’s IBRD lending, $6.38 million from IFAD and $67 million from Islamic Development Bank (IsDB) as short- term loan.

From all bilateral partners, Pakistan receives $113.8 million including $100 million from KSA as oil facility, $8 million from USA, $4.85 million from Korea and $0.56 million, $0.17 million and $0.13 million from France, Germany and Japan respectively.

Pakistan received $74 million through Naya Pakistan Certificates in July 2023. The time deposits brought $2 billion into national kitty helping Islamabad to jack up its foreign exchange reserves held by the SBP.