Loans, grants shrunk to $2.313b against estimates of $9.691b

ISLAMABAD: Ministry of Finance is making efforts to hide bitter facts from general public as the total disbursements in shape of loans, grants and other debt creating inflows have shrunk drastically in first half to the tune of $2.313 billion against budgetary estimates of $9.691 billion for whole financial year 2018-19.

Now the PTI-led regime will have to manage provisions of all loans, grants and materializing international bonds and borrowings from commercial banks to the tune of $7.378 billion in second half (January-June) period of the current fiscal year 2018-19, posing a serious challenges and threat for managing the affairs of the external accounts. The scarcity of these dollar inflows will be compensated by the generous assistance provided by the friendly countries such as Saudi Arabia, UAE and China but it will not help to jack up the foreign currency reserves.

However, one top official of Finance Division claimed that the foreign currency reserves held by the SBP would be increased and could touch $10 to $11 billion till end June 2019 against existing level of below $7 billion.

At a time when the multilateral creditors had suspended program loans because of non-availability of No Objection Certificate (NOC) on the health of the country’s economy from the IMF, the World Bank and Asian Development Bank are not ready to provide programme loans. In the aftermath of slashing down of foreign currency reserves below than two months for managing the import bill the multilateral creditors stopped approval of programme loans.

Secondly, the project financing from the multilateral creditors also slowed down because of political transition occurred in the country from May to August last year in 2018 as the Election Commission of Pakistan had slapped ban on approving development projects so the caretaker government did not convene CDWP and ECNEC meetings resulting into choking of donor funded projects very negatively. Now the PTI-led regime had started convening the CDWP and ECNEC and it was hoped that now the projects financing from the donor funded projects might accelerate the disbursements in months ahead.

The foreign loans and grants reduced significantly and stood at $2.313 billion in first six months (July-Dec) period of the current fiscal year against $5.8 billion in the same period of the last financial year, indicating over 60 percent decline in foreign assistance under the rule of PTI-led regime.

Instead of focusing on materialising the budget foreign loans and grants, the Ministry of Finance preferred issuance of clarification to divert attention from this fact that the foreign debt inflows reduced significantly in first half of the current fiscal year.

Now the Ministry of Finance stated in its official statement that a news item in reference to Economic Affairs Division’s Monthly Disbursement Report July-Dec, 2018 carried by a section of media on 29th January contends that PTI-led government received just $2.3 billion in first half (July-Dec) from all multilateral and bilateral creditors in shape of loans and grants in current fiscal year against $5.89 billion received in the same period last year.

This comparison is incorrect because in the previous corresponding period, the government received $2.5 billion additional from international capital markets through issuance of Eurobonds and Sukuk and raised $1.16 billion from commercial sources. However the present government hasn’t gone for these options so far.