In a comprehensive report by the Economic Affairs Division (EAD), it’s revealed that Pakistan secured foreign loans totaling $5.968 billion during the initial half (July-December) of the fiscal year 2023-24, marking a significant uptick from the $5.595 billion borrowed in the same period of the previous fiscal year.
Noteworthy Inflows and Borrowing Trends
December 2023 vs. December 2022
The data underscores a noteworthy surge in borrowing, with Pakistan receiving $1.621 billion in December 2023 compared to $478.05 million in December 2022. This influx contributes to the overall financial landscape, showcasing the country’s proactive approach in securing external financial support.
IMF and UAE Contributions
Despite the EAD data not reflecting the $1.2 billion received from the International Monetary Fund (IMF) as the first tranche of the $3 billion Stand-By Arrangement (SBA) in July 2023, it plays a crucial role in shaping Pakistan’s fiscal standing. Additionally, the disbursement of $1 billion by the UAE further elevates the total inflows to an estimated $8.168 billion during the first half of the fiscal year.
Detailed Breakdown of Borrowings
Saudi Arabia’s Strategic Deposit
A significant portion of the borrowed funds, $2 billion, was received from Saudi Arabia under the head of a time deposit in July 2023. This strategic deposit enhances Pakistan’s financial reserves and strengthens diplomatic ties.
Budgetary Projections and Realities
While the government had budgeted $4.5 billion from foreign commercial banks and $1.5 billion from bond issuances for the fiscal year 2023-24, the actual receipts during the initial half remain absent under these heads. This variance between projections and actual borrowings reflects the evolving nature of fiscal planning.
Multilateral and Bilateral Aid
Pakistan received $2.245 billion from multilaterals and $723.13 million from bilateral sources during July-December 2023-24. The non-project aid, encompassing budgetary support, amounted to $2.636 billion, while project aid stood at $2.386 billion.
Foreign Disbursements by Key Contributors
China’s Involvement and Diversification
China, a key player in Pakistan’s financial landscape, disbursed $508.34 million for the JF-17 B project and an additional $42.18 million during July-December. Meanwhile, the Asian Development Bank (ADB) contributed $589.43 million, albeit below the budgeted $2.086 billion for the fiscal year 2023-24.
Saudi Arabia, US, Korea, and France
Saudi Arabia disbursed $595.18 million under the oil facility, the US provided $25.09 million, Korea disbursed $12.38 million, and France contributed $20.15 million during the initial half of the fiscal year.
International Financial Institutions
International financial institutions played a crucial role, with the International Development Association (IDA) disbursing $1.040 million and the International Bank for Reconstruction and Development (IBRD) contributing $117.36 million during July-December.
IsDB, AIIB, and IFAD
The Islamic Development Bank (IsDB) (Short-term) disbursed $100 million, the Asian Infrastructure Investment Bank (AIIB) contributed $287.04 million, and the International Fund for Agricultural Development (IFAD) disbursed $23.12 million during the same period.