Foreign loans worth $10.7bn taken in FY20

ISLAMABAD: Pakistan paid $10.4 billion on account of debt servicing of external public loans during FY20, according to an annual report on foreign economic assistance released by the Economic Affairs Division (EAD) on Friday.

 

The report states that the PTI government paid an amount of $10.4 billion during FY20 on account of debt servicing of external public loans, consisting of a principal payment of $8.5 billion and interest payment of $1.9 billion.

 

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According to the details, Pakistan paid $704 million to China, $228 million Japan, $1,005 million ADB and $4,900 million commercial banks apart from other countries as well as lending organisations.

   

On the other hand, multilateral and bilateral development partners disbursed $6.5 billion in 2019-20 as compared to $4.1 billion last year, registering 59pc growth.

 

In addition, the government also raised $3.4 billion from foreign commercial sources to meet its external debt obligations and support the balance of payments. Out of the total disbursement of $10.7 billion, 97pc were loans and 3pc were grants.

 

The report mentioned that disbursements of $10.7 billion during 2019-20 were mainly under the projects and programs loans/grants from multilateral, bilateral development partners and financial institutions. The disbursement included $5,645m or 53pc of total disbursements were from the multilateral development partners mainly from Asian Development Bank (ADB), Islamic Development Bank (IDB), Asian Infrastructure Investment Bank (AIIB) and the World Bank (WB).

In addition, $3,373m or 32pc of total disbursements were from foreign commercial banks mainly to refinance maturing commercial debt of past periods.

 

An amount of $1,644m or 15pc of the disbursements were from bilateral development partners particularly Saudi Arabia, China and the UK.

During the period under review, 74pc of the total disbursements were programme budgetary support, 19pc project financing while remaining 7pc commodity financing mainly from Islamic Development Bank for purchase of crude oil, the report mentioned.

 

Out of this total budgetary support component, $4.6 billion was the programme support and the remaining $3.3 billion was arranged as re-financing by the Finance Division from various foreign commercial banks.

 

The largest sector in terms of disbursements is transport and communication at 32pc followed by rural development & poverty reduction sector 11pc, education 11pc, energy and power sector 10pc and health sector 9pc, the report stated.

 

The report also revealed that Pakistan’s total external public debt stands at $77.9 billion as of June 30, 2020. The external public debt was $73.4 billion last year so it grew at the rate of 6pc.

 

Pakistan’s external public debt is derived from multilateral debt comprising 51pc inclusive IMF, followed by bilateral 31pc inclusive of China’s SAFE deposits while remaining 18pc from foreign commercial banks and institutions inclusive of Eurobonds and Sukuk.

 

The report also states that Pakistan also signed new agreements worth $10,447m with various development partners and foreign commercial banks during 2019-20.

 

Around $3,463 million worth of agreements, which constituted 33pc of the total new commitments, were by the commercial banks, the report revealed that this high level of commercial financing was arranged to refinance maturing commercial debt during the year.


It is pertinent to mention here that an amount of $7.5 billion has been committed as budgetary support; of which $4.0 billion was committed by multilateral development partners as program financing and remaining was obtained from foreign commercial banks.

 

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