Foreign loans, grants surge 92 percent to surpass $2 billion in July-September

ISLAMABAD: Foreign inflows on account of loans and grants posted an enormous 92 percent growth to cross the $2 billion mark in the first quarter of the current fiscal year, official data revealed on Thursday.

Foreign loans and grants amounted to $1.04 billion in the corresponding period a year earlier, the provisional data available with The News showed.

There was a major increase in commercial borrowings as Pakistan fetched more than $500 million during the first quarter of the current fiscal year as against $200.53 million in the corresponding period of the last fiscal year, registering an increase of more than 150 percent.

The official data showed that commercial borrowings stood at $321.5 million in the first two months of July and August 2019. This indicated that the government continued to muster foreign inflows through commercial borrowings in September 2019.

The commercial borrowing is considered as an easy tool of managing foreign inflows as the ministry of finance used to get dollar inflows from selected few banks without fulfilling the requirement of Public Procurement Regulatory Authority.

The Pakistan Tehreek-e-Insaaf-led government envisaged disbursements of foreign loans and grants to the tune of $12.9 billion in the current fiscal year compared to $10.89 billion a year earlier.

Foreign inflows in shape of disbursements from the multilateral creditors, such as the World Bank and Asian Development Bank, also increased during the period under review.

“There is still a need to streamline execution of projects funded by the World Bank,” a well-placed source said. The source added that secretary economic affairs division had put a lot of efforts to accelerate the disbursements of foreign inflows by fulfilling the requirements of donors.

Sources said Islamabad planned to raise $3 billion through Eurobond and sukuk during the current fiscal year.

It was also planned by the government to launch international bonds next month in order to shore up current reserves of foreign exchange. The government has already appointed transaction advisors and the process of due diligence is underway at the moment.

Finance ministry’s spokesman Omar Hamid Khan confirmed that the due diligence was being carried out for launching of international bonds during the current fiscal. The transaction advisors have been appointed. The timing of launch will be determined on the basis of appetite of the markets, Khan, who is special secretary finance said.

Amid fluid political situation in the wake of ‘Azadi March’ announced by Jamiat-e-Ulema Islam-Fazal within next few days, it would be a challenging situation for the incumbent regime to ensure stability on political horizon of the country as alone political stability could guarantee planned foreign inflows ‘well on time’.

In the aftermath of striking agreement with the International Monetary Fund, the pace of disbursements from multilateral and bilateral creditors had gone up manifold – a fact that also reflects in provisional disbursement data of foreign loans and grants.

Pakistan received total disbursements of $1.622 billion in the first two months (July and August) 2019 and Islamabad managed to fetch $448 million in September 2019. Total received foreign inflows had gone up to $2.070 billion in the first three months of the current fiscal year. The disbursement of loans and grants stood at $448 million in September 2019 against $225.39 million in the same month of 2018, indicating that the pace of foreign inflows in shape of loans got momentum later.