Foreign loans fail to build country’s foreign exchange reserves

ISLAMABAD             -           Pakistan has received only $5.114 billion foreign loans in five months, which is not sufficient to build the country’s foreign exchange reserves, which have fallen drastically to below $7 billion due to loan repayments. The country has received $3.948 billion from multilateral and bilateral sources and commercial banks and $1.116 from the International Monetary Fund (IMF), making total $5.114 billion in July to November period of the current fiscal year. The government has budgeted foreign assistance of $22.8 billion for the current fiscal year. However, the country has received only 22 percent ($5.114 billion) of the five months of the year 2022-23. The inflows are not sufficient to meet the country’s need as foreign exchange reserves held by the State Bank of Pakistan (SBP) have declined to alarming level of below $7 billion after the payment against maturing International Sukuk and some other external debt repayments. The SBP reserves decreased to $6.714 billion. Reserves are enough to cover around only month imports of the country. According to the latest data of Ministry of Economic Affairs, the government has received $846.76 million external loans in November 2022. The breakup of $5.114 billion showed that Pakistan has taken $3.06 billion from the multilateral sources, 602.86 million from bilateral sources, $200 million from commercial banks, $1.166 billion from the IMF and $139.28 million from Naya Pakistan Certificates in July to November period of FY23. The government has budgeted foreign assistance of $22.8 billion for the current fiscal year including $7.5 billion foreign commercial banks, $22.655 billion loans, and $161.46 million grants. China has disbursed $54.93 million in during the first five months of the current fiscal year against the government budgeted estimates of $49.02 million for the current fiscal year. Saudi Arabia disbursed $500 million under the defer oil payment facility against the budgeted $800 million. The USA disbursed $10.59 million during the period under review against the budgeted $32.49 million for the current fiscal year. Korea disbursed $18.38 million and France $8.64 million during July to November period of the current fiscal year. In multilateral, the Asian Development Bank (ADB) disbursed $1.676 billion out of $3.202 billion budgeted for the current fiscal year. The IDA $548.07 million against the budgeted $1.4 billion, IBRD $75.89 million against the budgeted $1.246 billion and Islamic Development Bank disbursed $15.3m against the budgeted $3.38m for the current financial year. The government had projected external financing need of $33 billion, of which, $23 billion is debt and $10 billion is a current account deficit for the current fiscal year. State Bank of Pakistan Governor Jameel Ahmed recently said that the government had projected $34-38 billion from resources identified of which $4 billion has been received so far. In the current financial year, the loan of $6 billion has been paid back while another loan of $4 billion was rolled over i.e. $10 billion already covered, said the SBP governor, adding that discussions are being held regarding the rollover of commercial loans of various countries of $8.3 billion. The government has to pay back of $4.7 billion of different multilateral including the IMF, the World Bank, the Asian Development Bank (ADB), and others, while the $1.1 billion of foreign commercials banks to be paid back as these would not be rolled over. He said that $4.5 billion have to be returned instead of $13 billion, while loans of $18 to $20 billion are likely to be received this financial year. The country is expected to face a shortfall in commercial borrowing inflows as well as not going for floating bonds given the current situation, said Ahmad, adding that inflows would be better in the second half of the current fiscal year.

ePaper - Nawaiwaqt