The report identified a total external debt from three key sources – 51 percent international debt, followed by 31 percent bilateral debt, including China’s SAFE reserves, and 18 percent from foreign trade institutions and institutions.
The cash-strapped Pakistan received a new loan of USD 10.447 billion from international institutions and commercial banks for the 2019-20 financial year, about one-fourth higher than USD 8.4 billion last year, according to a media report.
According to the 2019-20 Annual Report on Foreign Economic Assistance released by the Department of Economic Affairs, 99 percent of the new agreements were for loans and the remaining 1 percent for grant obligations, reports Dawn News.
In the new USD 10.447 billion new agreements, more than 6.79 billion funding agreements have been signed with international organizations, USD 3.463 billion with foreign trade banks and USD 193 million with international lenders.
The report said a high level of commercial finance worth USD 3.463 billion – including 33 per cent of new contracts – has been obtained from commercial banks until the burning of commercial debt is repaired during the year.
The Asia Development Bank (ADB) emerged as the largest lender with 30 percent new commitments, followed by the World Bank with 22 percent, the Islamic Development Bank (IDB) with 7 percent and the Asian Infrastructure Investment Bank (AIIB). ) by 5 percent. These financial institutions have extended funding for approximately 98 percent of the new commitments.
The report said 69 percent of the new commitments for FY 2019-20 year were made under the budget support category. “This high level of budget support is very much in place to eradicate the social and economic impact of the Covid-19 epidemic and to meet the high foreign exchange requirements for debt retirement,” he added.
Approximately 26 percent of new commitments are allocated to project funding and 5 percent to asset funds.
The new commitment was higher than the budget in view of the Covid-19 epidemic. A total of USD 7.5 billion has been set aside to fund the budget, of which USD 4 billion is made by as many people as program funds and the remainder from foreign commercial banks, the report said.
The largest share (40 percent) of new commitments is for transport and communication at FY 2019-20, followed by 19 percent for health, 12 percent for physical and housing planning, 10 percent for rural development and poverty reduction, 9 percent for sector electricity and six percent in agriculture.
On the other hand, the total disbursement of foreign loans to FY 2019-20 reached USD 10.7 billion – slightly lower than USD 10.8 billion over the same period of FY 2018-19. Of these, 97 percent was in the form of loans and 3% in grants, the report said.
Debts include USD 6.5 billion by multinational and multinational lenders compared to USD 4.1 billion last year, registering 59 percent growth. In addition, the government also raised USD 3.4 billion in foreign exchange sources to meet its foreign debt obligations and to finance outstanding arrears.
The USD 10.7 billion disbursement was significantly lower for projects and program loans or grants from multinational, bilingual and financial institutions. This includes USD 5.645 billion or 53 percent of total payments from the majority, most notably the ADB, IDB, AIIB and World Bank. USD 3,373 million or 32 percent of total payments from foreign commercial banks mainly to finance the burning of commercial debt. Another USD 1.644 billion or 15 per cent of the repayments came from two international lenders, mainly Saudi Arabia, China and the United Kingdom.
As of June 30, 2020, Pakistan’s external public debt reached USD 77.9 billion, compared to USD 73.4 billion over the same period last year, which represents an increase of 6 percent.
The report identified a total external debt from three key sources – 51 percent international debt, followed by 31 percent bilateral debt, including China’s SAFE reserves, and the remaining 18 percent from foreign trade banks and institutions, including Eurobonds and Sukuk.
Following the calculation of total payments and new payments, total transfers to government during FY 2019-20 amounted to USD 1.8 billion. The report said foreign stocks acquired with market-based instruments fell by USD 2.062 billion in bonds and commercial loans and the share of long-term foreign loans increased by USD 3.87 billion in international and bilateral loans, indicating moderate foreign investment.
The report said transfers have dropped dramatically since 2018. “Despite the high level of external debt repayment, Pakistan has successfully utilized its debt record for the year FY 2019-20 by successfully consolidating foreign resources and eliminating the focus on more expensive short-term transactions for long-term revenue payments,” it said, seeking prominence on foreign debt management and resilience. of lenders’ confidence.
The Department of Economic Affairs said about 70 percent of the external public debt consists of fixed interest rates on June 30, 2020, while the remaining 30 percent was found at floating interest rates.