October 27, 2020 (MLN): Pakistan has received $2.734 billion foreign aid during 1QFY21 from bilateral and multilateral development partners, foreign commercial borrowing, and time deposits to restructure its economy and finance its development projects.
This foreign aid provides a wide range of support in the areas of capital formation, employment, health, education, public transport, water reservoir, and more, driving economic growth and helping to promote socio-economic and human development in Pakistan.
According to the data released by the Policy Analysis & Development Wing of EAD, these external inflows from multiple sources is around 22% of the annual budget estimates of $12.23 billion for the entire fiscal year FY21. In the corresponding period of the FY20, the external inflows were $2.180 billion i.e. around 17% of the annual budgeted amount of $12.958 billion.
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.
Going into details made available by Policy Analysis & Development Wing of EAD, out of $2.734 billion, the government received $1.268 billion or 46% in the form of program/budgetary support assistance to restructure Pakistan’s economy, $149 million (5%) as foreign commercial borrowing to repay maturing international Sukuk and other foreign commercial loans, $317 million (12%) 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 1QFY21, the bilateral and multilateral development partners have disbursed $1.585 billion of foreign economic assistance against the budgetary allocation of $5.811 billion for FY21 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-Sept FY21 totaled $1.485 billion. Amongst the multilateral development partners, Asian Development Bank provided $637 million and World Bank $592 million against the budgetary allocation of $2.257 billion.
The monthly bulletin revealed that the collective disbursement from bilateral donors amounted to $100 million during 1QFY21 wherein Pakistan received $25.3 million from France, followed by the United States with $52.3 million and the UK with $13.4 million.
On the external outflows front, during Jul-Aug FY21, the total servicing of external public debt was $798 million against the annual repayment estimates of $10.363 billion for the entire fiscal year. Of this, $661 million (83% of total external public debt servicing) was repaid as principal and $137 million (17%) as interest on the outstanding stock of external public debt.
During Jul-Aug FY21, the monthly bulletin disclosed that the government settled $204 million worth of foreign commercial loans. Pakistan settled $493 million to multilateral and $102 million worth of external loans to bilateral development partners.
For the period Jul-Aug FY21, net transfers to the government were $1.004 billion. Positive net transfers came mainly due to higher inflows from multilateral Development Partners.
Interestingly, the stock of external loans which was obtained on market-based instruments has decreased by $28 million and the share of concessional external loans with longer maturity increased by $1.031 billion.
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