Pakistan obtains $1b loan in May to shore up inflows

ISLAMABAD: Pakistan has obtained a $1 billion guaranteed loan from a bilateral partner in May 2021 probably from China that helped shore up external inflows up to $12.134 billion in the first 11 months (July-May) period of the current fiscal year 2020-21.

The government had envisaged to fetch total foreign inflows to the tune of $12.233 billion mainly in the shape of loans during the whole fiscal year and it seemed that Islamabad might surpass its envisaged target to get increased foreign funding than it had budgeted on the eve of the last budget.

Top official sources of the PTI-led government confirmed to The News in background exclusive discussions on Thursday that the total provisional disbursements of external loans went up to $12.13 billion during July-May period of the current fiscal year against $10.6 billion obtained in the whole last fiscal year 2019-20.

The total external inflows in the shape of multilateral loans, bilateral loans and issuance of international bonds had fetched $10.195 billion in the first 10 months (July-April) period of the current fiscal year. However, the external inflows jumped up by around $2 billion in May 2021 out of which around $1 billion was obtained in the shape of a guaranteed loan from the bilateral partner. This bilateral partner is probably China as it provided a guaranteed loan to help Islamabad to construct its much-desired infrastructure. When contacted, top functionaries of the government said that some disbursements were included into inflows as the payments were made through guaranteed loans, so it was made part of official inflows in subsequent periods.

Out of a total provisional disbursed amount of $12.134 billion, Pakistan received $3.37 billion loans from multilateral creditors such as the World Bank, Asian Development Bank, Islamic Development Bank, Asian Infrastructure Investment Bank and others so far in the current fiscal year. The provisional bilateral disbursement has gone up to $1.531 billion in the first 11 months of the current fiscal year. The disbursement from bilateral creditors stood at $367.5 million during the first 10 months (July-April) period of the current fiscal year but it witnessed sudden surge in May 2021 and climbed up to $1.531 billion in July-May period of 2020-21. When this correspondent further probed, it was told that it was one guaranteed loan amounting to $1 billion. The commercial banks provided external loans of $3.732 billion in the July-May period of the current fiscal year. The government had obtained commercial foreign loans of $3.246 billion in the first 10 months (July-April) period of the current fiscal year. It shows the government obtained $476 million in May 2021. The government also raised $2.5 billion through issuance of Eurobond during the current fiscal year.

During the entire last fiscal year 2019-20, the government had received $10.662 billion total external inflows from multiple financing sources which were 82 percent of annual budget estimates of $12.958 billion for the entire fiscal year.

In fiscal year 2018-19, the external inflows stood at $10.595 billion, which were around (109pc) of the annual budgeted amount of $9.692 billion.

In the aftermath of Covid-19 and its persistence in the country, the disbursements of project loans had dried up during the fourth quarter of the last fiscal year 2019-20.