September 25, 2020 (MLN): Pakistan has received foreign aid worth $2.248 billion during the first two months of the fiscal year 2020-21 from bilateral and multilateral development partners, foreign commercial borrowing, and time deposits to influence the process of development by increased investment in productive resources and transferring the modern technology.
This foreign aid in Pakistan is a major source of socio-economic & human development, the capital formation which can trigger economic growth.
According to the data released by the Policy Analysis & Development Wing of EAD, this external inflows from multiple sources is around 18% of the annual budget estimates of $12.23 billion for the entire fiscal year FY 2019-21. In the corresponding period of the fiscal year 2019-20, the external inflows were $1.659 billion i.e. around 13% of the annual budgeted amount of $12.958 billion.
It is pertinent to mention that the economic activity is reviving post-COVID-19 lockdowns which may lead to jack-up the project financing in the current fiscal year 2020-21.
Details made available here on Friday by Policy Analysis & Development Wing of EAD, out of $2.248 billion, the government received $961 million or 44% in the form of program/budgetary support assistance to restructure Pakistan’s economy, $149 million (7%) as foreign commercial borrowing to repay maturing international Sukuk and other foreign commercial loans, $138 million (6%) as project assistance to finance its development projects for improving the socio-economic development of the country and for asset creation and $1 billion received in terms of time safe deposits.
During Jul-Aug FY21, the bilateral and multilateral development partners have disbursed $1.099 billion of foreign economic assistance against the budgetary allocation of $5.811 billion for the fiscal year 2020-21 on concessional terms with a longer maturity, the monthly bulletin of Foreign Economic Assistance by Economic Affairs Division (EAD) reported.
Foreign assistance obtained by Pakistan through multilateral sources during Jul-Aug FY21 totaled $1.043 billion. Amongst the multilateral development partners, Asian Development Bank provided $259 million and World Bank $531 million against the budgetary allocation of $2.257 billion.
The monthly bulletin revealed that the collective disbursement from bilateral donors amounted to $56 million during Jul-Aug FY21 wherein Pakistan received $23.7 million from France, followed by the United States with $23.9 million and the UK with $7 million.
On the external outflows front, during July’20, the total servicing of external public debt was $484 million against the annual repayment estimates of $10.363 billion for the entire fiscal year. Of this, $8.338 billion (82% of total external public debt servicing) was repaid as principal and $1.802 billion (18%) as interest on the outstanding stock of external public debt.
During FY21, the monthly bulletin disclosed that Pakistan settled $331 million to multilateral and $102 million worth of external loans to bilateral development partners.
Moreover, during FY20, the government repaid $51 million worth of foreign commercial loans and repaid $1 billion worth of international Sukuk issued in December 2014, the bulletin revealed.
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