Foreign loans, grants worth $20bln expected in FY2020

ISLAMABAD: Pakistan is expecting almost $20 billion in shape of loans and grants from multilateral donors as well as foreign countries during the next fiscal year, which would lend a much-needed support to the country’s anemic external account.

A latest budget document showed that the projected foreign inflows are more than double over $9.2 billion mobilised from China, UAE and Saudi Arabia during the current 2018/19 fiscal year.

The document showed that the government projected foreign inflows, including grants and loans, in rupee terms from friendly countries and multilateral donors at Rs3.032 trillion in FY2020. The inflows amounted to Rs1.118 trillion budgeted in the outgoing fiscal year, 116 percent more than the revised estimates of Rs1.403 trillion.

The country budgeted Rs3.003 trillion in loans for 2019/20 as against Rs1.366 trillion. Originally, the inflows were estimated at Rs1.087 trillion for the current fiscal year. The government budgeted Rs357.450 billion for budgetary support from the International Monetary Fund during the next fiscal year.

Another Rs252.19 billion is expected from the Asian Development Bank compared Rs77.825 billion. ADB’s inflows in FY2019 were initially expected at Rs161.632 billion. The country budgeted Rs148.272 billion in loans from the International Development Association in FY2020 as against Rs72.577 billion, which was revised up from Rs68.253 billion in the current fiscal year.

The Islamic Development Bank would lend Rs166.14 billion during the next fiscal year compared to Rs101.413 billion, which was revised down from Rs119.479 billion in the current fiscal year.

The government would receive Rs17.839 billion in FY2020 from the International Bank for Reconstruction and Development as against Rs22.561 billion. The original estimate was Rs23.668 billion. The budget document further showed that the government is expecting Rs750 billion from friendly countries, including Rs484.7 billion from Saudi Arabia in shape of oil deferred payment for the next fiscal year as opposed to mere Rs8.894 billion in the current fiscal year. China would pour Rs60.908 billion in foreign assistance compared to Rs502.062 billion, which was different from the initial estimate of Rs98.395 billion. Nothing was expected under the Chinese State Administration of Foreign Exchange (Safe) deposits. The last budget was also expecting zero amount under Safe deposits, but later Rs275 billion was estimated under the head in the 2018/19 fiscal year.

The government estimated foreign assistance of Rs4.605 billion from France, Rs1.715 billion from Korea, Rs70 million from Turkish Exim Bank, Rs12.348 billion from the USA and Rs3.150 billion from Japan in next fiscal year.

The government is expecting Rs300 billion from foreign commercial banks in 2019/20 as against Rs502.062 billion, which was slashed from Rs234 billion for 2018/19. The government budgeted Rs450 billion through floating of sukuk bonds for 2019/20 as against Rs6.875 billion, which was sharply cut from an initial estimate of Rs351 billion.

The document showed that foreign grants of Rs28.496 billion are expected in the next fiscal year as opposed to Rs36.68 billion, which was revised up from Rs30.032 billion. Foreign component for public sector development program was estimated at Rs13.796 billion for the next fiscal year as compared to Rs16.07 billion, which was slashed from Rs8.604 billion for the current fiscal year.