July 2, 2021 (MLN): The government of Pakistan has signed new agreements worth $8,276million with various development partners, SAFE deposits, and foreign commercial banks during FY21, revealed “Quarterly Report on Foreign Economic Assistance” released by Economic Affairs Ministry on Thursday.
Out of the total new agreements, $3,988mn worth of financing agreements were signed with multilateral development partners, $3,110mn with foreign commercial banks, $1,000mn as SAFE deposit, and $178mn with bilateral development partners.
Going by the report, around $3,110mn worth of agreements, which constituted 38% of the total new commitments were commercial borrowing. This financing was arranged to refinance maturing commercial debt. An amount of $1,000mn (12%) has been arranged from China SAFE authority to repay deposits to a friendly country.
After commercial banks and SAFE Deposit, World Bank emerged as the largest development partner in terms of new commitments of FEA (30%) followed by Asian Development Bank (7%), Islamic Development Bank (6%) and Asian Infrastructure Investment Bank (4%).
During the period, an amount of $4,527 million has been committed as budgetary support; of which $1,417was committed by multilateral development partners as program financing. The program financing has been arranged to broaden and deepen the financial system, improve fiscal management and regulatory framework to foster growth and competitiveness in Pakistan. The remaining amount of $3,110mn was arranged from foreign commercial banks. An amount of $2,269mn was allocated for project financing. Similarly, $1,000mn has also been arranged from the SAFE authority. The remaining amount of $480mn has been arranged for commodity financing purposes.
Disbursements of $7.4bn during July-Mar FY21 were mainly under the projects and programmes loans/grants from multilateral, bilateral development partners and financial institutions.
With regards to the composition of disbursements, $2,935mn or 40% of total disbursements were from the multilateral development partners, mainly Asian Development Bank, World Bank, Islamic Development Bank, and Asian Infrastructure Investment Bank, while $3,120mn or 42% of total disbursements were from foreign commercial banks.
Moreover, $1,000mn or 13% of total disbursement were from SAFE deposit, and $358mn or 5% of the disbursements were from bilateral development partners particularly China, France, USA, and the UK.
With regards to the country’s debt position, the report highlighted that by the end of 31st March 2021, Pakistan’s total external public debt stood at $81.2bn. The major source is multilateral debt (comprising of 50% inclusive of IMF), followed by bilateral 26%, and foreign commercial banks11% while the remaining 13% of debt consists of SAFE deposits and Bonds (inclusive of Sukuk).
The document revealed that the government paid an amount of $5,419mn during July-March FY21 on account of debt servicing of external public loans. It consists of a principal payment of $4,374mn and an interest payment of $1,045mn.
During the period, the majority of repayments were made against the commercial banks (48%), followed by IDB (15%), ADB (14%), World Bank (12%), Bonds (4%), and China (3%).
The report further noted that net transfers to the government debt were $2,850mn. An amount of $1,000nn was arranged from SAFE authority to repay the deposit received from a friendly country.
Furthermore, the share of concessional external loans with longer maturity increased by $1,074million (multilateral and bilateral loans) and the share of commercial borrowing has increased by $776mn. This indicates qualitative improvement in the external public debt stock, it added.
Copyright Mettis Link News
42037
