June 29, 2020 (MLN): Pakistan has received $7.451 billion foreign assistance during Jul-May FY20 from bilateral and multilateral development partners, foreign commercial borrowing, and commodity financing from Islamic Development Bank and Saudi Arabia 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, fuelling economic growth and helping to promote socio-economic and human development in Pakistan.
This external inflows from multiple sources is around 58% 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 data released by Policy Analysis & Development Wing of EAD, out of $7.451 billion, the government received $2.333 billion or 31% in the form of program/budgetary support aid from Asian Development Bank, World Bank, Korea, and the U.K. to restructure Pakistan’s economy, $2.073 billion (28%) as foreign commercial borrowing to repay maturing international Sukuk of $1 billion and other foreign commercial loans, $1.772 billion, $ 1.329 billion (19%) to finance its development projects for improving the socio-economic development of the country and remaining $1.583 billion (21%) for commodity financing.
The total disbursement as foreign economic assistance from bilateral and multilateral development partners to Pakistan is around $4.61 billion which is on concessional terms with longer maturity in the eleven months (Jul-May) of FY20, the monthly bulletin of Foreign Economic Assistance by Economic Affairs Division (EAD) reported.
During 11MFY20, the collective disbursement from bilateral donors amounted to $853 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, $61 million from the United States during 11MFY20.
Foreign assistance obtained by Pakistan through multilateral sources during Jul-May FY20 totaled $3.757 billion. Amongst the multilateral development partners, Asian Development Bank provided $2.296 billion, Islamic Development Bank $879 million, and World Bank $524 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 and $0.76 million to the ‘Motorway M-4 Gojra-Sorkot’ project and ‘Motorway M-4 Gojra-Sorkot-Khanewal’ project respectively.
On external outflows front, during Jul-April 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 $1.760 billion to multilateral and $723 million worth of external loans of bilateral development partners during the first ten months of the current fiscal year.
Moreover, during the first ten months of the current fiscal year, the government settled $2.077 billion worth of foreign commercial loans and repaid $1 billion worth of international Sukuk issued in December 2014.
Considering foreign exchange constraints, financing of development projects and repayments of these huge external public debts compel the incumbent government to further borrow from multiple sources.
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