Pakistan receives $10.8bn foreign loans in FY23

ISLAMABAD: The Prime Minister Shehbaz Sharif led Federal Government has received only 47 percent budgeted external loans in the last fiscal year due to its inability to revive the stalled bailout package of the International Monetary Fund (IMF).

According to Statistics Compiled by the Ministry of Economic Affairs, Pakistan received $10.8 billion in foreign loans against the budgeted estimates of $22.6 billion during fiscal year 2022-23.

According to the data, the forex reserves of the SBP was depreciated from $8.395 billion in July 2022 to $4.46 billion in June 2023.

They also touched the lowest level of $3.11 billion in Jan 2023 due to high payments of external loans.

The data shows that the Pak Rupee depreciated against the US$ from Rs.204 to Rs.290 during the last fiscal year.

This depreciation of local currency brought a flood of inflation and uncertainty in the economy. According to the data, against the estimates of $7.6 billion.

The incumbent government also received $5.2 billion in loans from the multilateral creditors, 31% less than the estimates during the last fiscal year.

The Asian Development Bank (ADB) remained the largest creditor and extended $2.3 billion during the last fiscal year.

The World Bank disbursed $2.1 billion in loans against the annual estimates of $2.6 billion. The Islamic Development Bank gave $161 million for oil financing against the estimates of $1.2 billion.

Against an annual estimate of $7.5 billion, Pakistan received $2.2 billion in foreign commercial loans in the last fiscal year, 71% less than the budgeted amount.

In June, Pakistan received $1.3 billion foreign commercial loans from China. Poor credit ratings and failure to revive the stalled programme led to low disbursements by the foreign commercial banks.

The planned $2 billion sovereign bond-based borrowing did not materialise due to poor credit ratings and expected high-interest costs.

The government also expected to receive $3 billion from the IMF,  but only got $1.2 billion till the end of this fiscal year.

Furthermore, the government received only $789 million under the Naya Pakistan Certificates against the annual estimates of $1.63 billion.

The government had increased the interest rates on the Naya Pakistan Certificates to attract more loans. The bilateral creditors disbursed $1.5 billion as against the estimates of $970 million. The higher disbursements were due to the Saudi Arabian oil facility.

Pakistan also received $1.2 billion equal oil from Saudi Arabia against the budgeted amount of $800 million.

The decrease in disbursements was mainly because of the fact that major international creditors stayed away due to the government’s inability to timely revive the $6.5 billion Extended Fund Facility (EFF).