May 20, 2020 (MLN): Pakistan has acquired $7.381 billion foreign assistance during Jul-April FY20 from bilateral and multilateral development partners, foreign commercial borrowing, and commodity financing from Islamic Development Bank and Saudi Arabia.
This external inflows from multiple sources is around 57% of the budgeted amount of $12,958 million for the entire fiscal year FY 2019-20. These relatively low disbursements during FY 2019-20 may be attributed to the outbreak of Covid-19 as the pandemic has completely halted the development activities across the country.
However, ease in the lockdown by the Government may lead to jack-up the project financing in the coming months.
According to the monthly bulletin of Foreign Economic Assistance by Economic Affairs Division (EAD), Pakistan received around $4.758 billion as foreign economic assistance from bilateral and multilateral development partners on concessional terms with longer maturity in the ten months (Jul-April) of FY20.
During 10MFY20, the collective disbursement from bilateral donors amounted to $850 million.
A breakup of the funds received from bilateral sources shows that Pakistan received $487 million from China, followed by $128 million from the United Kingdom, $94 million from Korea, $59 million from the United States during 10MFY20.
Foreign assistance obtained by Pakistan through multilateral sources during Jul-April FY20 totaled $3.68 billion. Amongst the multilateral development partners, Asian Development Bank provided $2.253 billion, Islamic Development Bank $879 million, and World Bank $505 million.
Regarding grants, ADB disbursed $13.92 million on the project of ‘Enhancing Public-Private Partnership in Sindh, Pakistan’, whereas it provided economic assistance of $18.22 million on ‘National Highway Network Development Program N-50 & N-70’project during 10MFY20.
During the period under review, ADB disbursed $3.63 million on ‘Enhancing Public-Private Partnership in Punjab’ project. Moreover, it granted $4.17 million to the ‘Motorway M-4 Gojra-Sorkot’ project.
On external outflows front, During Jul-Mar FY20 total servicing of external public debt was $6.530 billion against the budgeted amount of $10.423 billion for the entire fiscal year. Of which, $5.117 billion (78% of total external public debt servicing) was repaid as principal and $1.413 million (22%) as interest on the outstanding stock of external public debt.
The monthly bulletin revealed Pakistan settled $1.635 billion to multilateral and $710 million worth of external loans of bilateral development partners during the first nine months of the current fiscal year.
Similarly, the government has repaid $1.772 billion worth of foreign commercial loans and $1billion worth of international Sukuk issued in December 2014.
For the period July-March, 2019-20, net transfers to the government were $1.189 billion. Positive net transfers mainly come due to program lending by Asian Development Bank to address fiscal imbalances, ensure macroeconomic stability, and secure financial sustainability in the country, specified in the bulletin by EAD.
Interestingly, the stock of external loans which was obtained on market-based instruments has declined by $699 million and the share of concessional external loans with longer maturity increased by $1.88 billion.
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