External debt servicing consumed $2.4bn in 1st quarter

ISLAMABAD: Amid its dwindling foreign exchange reserves, Pakistan repaid $2.4 billion in the form of debt servicing of external public loans during the first quarter (July-September) of the current fiscal year, out of which the major chunk was paid back to the IMF.

“The government paid an amount of USD2,404 million from Jul-Sep 2023-24 on account of debt servicing of external public loans. This consists of principal repayment of USD1,627 million and interest payments of USD777 million,” an official report stated. Pakistan paid back $524 million to the IMF during the first quarter as debt servicing in the form of principal and interest repayments. Then Islamabad paid back $331 million to the World Bank, $283 million to the Asian Development Bank (ADB) and $108 million to the Islamic Development Bank (IsDB) in the first three months of the current fiscal year.

Among the bilateral creditors, Pakistan paid back to Saudi Arabia to the tune of $407 million in principal and interest repayments, $210 million to China, $26 million to Japan and $186 million to Non-Paris Club countries. The government repaid $190 million as external debt servicing to other creditors. The government paid back $40 million as interest repayment on international bonds. The government also paid back $99 million to commercial banks on account of interest repayments in the first three months of the current fiscal year.

In terms of new commitments, the Government of Pakistan signed new agreements worth $642 million in the 1st quarter Jul-Sep FY 2023-24. During the period under review, all new commitments have been funded by multilateral development partners.

Out of these commitments, 69pc were committed for project financing, 15pc as programme financing, and 16pc as commodity financing. In the first quarter of FY 2023-24, securing financing for mitigation of the devastating effects of floods-2022 was the key priority of the government. From Jul-Sep 2023-24, disbursements of $3,536 million were mainly under the project and programme loans/grants from multilateral development partners, bilateral development partners and financial institutions. The World Bank and IsDB were amongst the largest contributors among multilateral development partners. On the bilateral side, China emerged as the primary contributor to the total disbursements during the specified period disbursing $509 million followed by Saudi Arabia with $300 million for the import of oil and petroleum products.

External financing plays a pivotal role in the advancement of developing nations like Pakistan, serving as a catalyst for sustainable economic growth and progress. External debt is the total external debt owed by the country, whereas external public debt is the total external debt owed by the government. As of 30th of September 2023, Pakistan’s total external public debt amounted to $86,358 million.

The government paid $2,404 million during the first quarter of FY 2023-2024 on account of debt servicing of external public loans. Of this, principal repayments were $1,627 million and interest payments were $777 million. Furthermore, the net transfers to the government’s external public debt resulted in a positive balance, amounting to $1,869 million.