Govt signs $2.2bn in loan commitments for 9MFY24

August 13, 2024 (MLN): Pakistan's government has signed new agreements worth $2.166 billion in commitments from both multilateral and bilateral development partners for the period from July to March 2023-24, according to the Economic Affairs Division (EAD) quarterly report on foreign economic assistance.

Of the total commitments, multilateral development partners account for 98.98% ($2.144 billion), while bilateral development partners are set to disburse $22 million.

Among multilateral development partners, World Bank was one of the largest partners as it committed $888m (41% of multilateral partners).

The second-largest contributor was the Asian Development Bank (ADB), with commitments of $706m (33% of multilateral partners).

Next in line was the Asian Infrastructure Investment Bank (AIIB), which committed to disbursing $250m in loans, representing 12% of the total commitments from multilateral partners.

The breakup on the Mode of Commitments disclosed that $601m (28% of the total commitments) was committed for BOP/budgetary support to strengthen the foreign exchange reserves and stabilize the exchange rate.

$556m, constituting 26% of the total commitments, were committed for program financing through contributions from the World Bank and the Asian Development Bank (ADB).

Furthermore, an amount of $809m (37% of the total commitments) was earmarked for project financing followed by commodity financing of $200m (9% of the total commitments).

What are commitments

New commitments are the amounts of FEA that have been committed by the development partners during the observed time and are likely to be disbursed in the next five to six years.

The new commitments are recorded by the MoEA after the signing of the “financing instruments” with the development partners.

MoEA signs each instrument after rigorous consultations and negotiations with the stakeholders including Finance Division, Law and Justice Division and relevant sponsoring/executing agency of Federal/Provincial Governments.

In addition to this, the foreign loans signed by the Finance Division are also recorded in the MoEA’s database as “Commitments”.

The Finance Division raises funds from the international financial institutions and capital markets in the shape of foreign commercial loans and through issuance of Eurobonds/Sukuk to stabilize foreign exchange reserves and provide budgetary/balance of payments support.

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