Pakistan only received $2.234 billion in loans from international lenders in the first quarter
ISLAMABAD-Pakistan received just $2.234 billion in loans from international lenders in the first quarter (July to September) of the current fiscal year amid dwindling foreign exchange reserves.
Despite the revival of the IMF lending program, Pakistan has not received major financing from bilateral and multilateral sources in the first quarter (July to September) of the current financial year. Ahead of the IMF board meeting (August 29), it was felt that the revival of the IMF program would pave the way for securing loans from other international creditors. However, the country has not yet received significant financing from international lenders, which translates into a reduction in foreign exchange reserves.
The country has drawn $1.166 billion from the International Monetary Fund (IMF), $682.3 million from multilateral sources and $386 million from bilateral sources, bringing total loan disbursement to $2.234 billion from July to September FY23. The country did not receive any loans from foreign commercial banks during the first quarter of the current financial year (2022-23). The government had received a loan of $3.204 billion during the same period of the previous year. According to the latest data from the Ministry of Economic Affairs, the government received only $625.85 million in external loans in September 2022.
Meanwhile, international lenders had pledged to lend to Pakistan, which would bolster the country’s foreign exchange reserves. The Asian Development Bank (AfDB) has approved much-needed financing of $1.5 billion to help the Pakistani government, which would bolster the country’s foreign exchange reserves and improve the value of the local currency. The country would receive $1.5 billion next week. Approval of the AfDB loan would also pave the way for securing $500 million from the Asian Infrastructure Investment Bank (AIIB). The total disbursement will hit $2 billion in the current month.
The influx would help build up the country’s foreign exchange reserves, which had been dwindling. Reserves at the State Bank of Pakistan (SBP) as of last week had fallen by $303 million to $7,596.9 million. This decrease was entirely attributed to external debt repayments, which included the repayment of a commercial loan and the payment of interest on Eurobonds. The total liquid foreign exchange reserves held by the country stood at $13.246 billion. The foreign exchange reserves held by the SBP amount to 7.596 billion dollars and the net foreign exchange reserves held by commercial banks to 5.649 billion dollars. Pakistan is also expecting $1-2 billion from the World Bank. The government has budgeted foreign aid of $22.8 billion for the current fiscal year, including $7.5 billion from foreign commercial banks, $22.655 billion in loans and $161.46 million in grants.
China shelled out $54.93 million in the first quarter compared to the government’s budget estimate of $49.02 million for the current fiscal year. Saudi Arabia disbursed $300 million of the $800 million budgeted. The United States disbursed $9.95 million during the period under review compared to the $32.49 million budgeted for the current fiscal year. Korea shelled out $15.65 million and France $4.44 million in the first quarter of the current fiscal year.
The Asian Development Bank (AfDB) has disbursed $112.73 million out of the $3.202 billion budgeted for the current fiscal year. IDA disbursed $416.49 million of the budgeted $1.4 billion, IBRD disbursed $28.90 million of the budgeted $1.246 billion and the Islamic Development Bank disbursed $11.50 million of the $3.38 million budgeted for the current fiscal year.