Budget 2020-21: Pakistan to procure Rs 2.16 trillion worth of foreign loans in FY21

June 14, 2020 (MLN): The total amount for External Receipts in the federal budget for FY21 are estimated at Rs 2.22 trillion, shows a decline of 2% over the revised estimates for budget 2019-20.

The total External Receipts is the sum of External loans and External grants, the government has planned to obtain external loans worth Rs 2.16 trillion in the upcoming fiscal year (FY21) as compared to Rs 2.18 trillion received during the departing fiscal year FY20.

External loans which consist of Project loans, Programme Loans and Other Aid, a breakdown of which shows that government has planned to acquire Rs 218.15 billion as Project loans with federal government, ministries/divisions and provinces, Rs 503.56 billion as Programme loans and Rs 1.44 trillion as Other Aid.

According to the detailed budget document, in the form of Other Aid, the government would receive Rs 647.2 billion from Commercial Banks, Rs 247.5 billion through Euro Bond/ International Sukuk and Rs 165 billion from Islamic Development Bank. Moreover, under the deferred oil payment, the government will receive a relief of Rs 165 billion in FY21.

Furthermore, under the IMF loan program, the government would procure Rs 211 billion from IMF for budgetary support in FY21, compared to Rs 456.65 billion received in the outgoing fiscal year FY20.

Besides, government will receive Rs 20.66 billion worth of Foreign Grants in FY21 to aid projects of Federal departments, Autonomous bodies and Provinces. This shows a decline of 36% as in the outgoing fiscal year, government received Rs 32.49 billion as External Grants.

The government has also planned to obtain Rs 44.750 billion for project loans outside the PSDP, including Rs 2.34 in grants. If project loans outside the PSDP are included, the total external resources are valued to be Rs2.22 trillion in FY21.

Meanwhile, it is pertinent to mention that the major portion of these external receipts (Rs 1.23 trillion) will be spent to repay foreign loans, while Rs 183.69 billion would be consumed to repay short-term credits.

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