Govt fails to secure $9bn debt rollovers, receives only $426mn in July

The government failed to secure $9 billion in debt rollovers in July, managing to receive only $426 million from international lenders, according to an official report released by the Ministry of Economic Affairs. 

The monthly disbursement report highlighted that no new loans were obtained from foreign commercial banks or bilateral creditors, despite the government’s urgent need to secure foreign funding. 

The Ministry of Economic Affairs report also noted that the World Bank provided a $132.4 million loan last month, with funds allocated to projects in Sindh, Punjab, and the National Transmission and Dispatch Company (NTDC). 

The Asian Development Bank (ADB) disbursed $52 million for multiple schemes, while China contributed $97 million for the Pakistan Multi-Mission Satellite project. 

Additionally, $128 million was raised through Naya Pakistan Certificates, though these come at a high cost.

No disbursements were made against the annual projected budget estimates of $3.8 billion from foreign commercial banks, and Pakistan still plans to borrow $1 billion through sovereign bonds this fiscal year.

The rollover of Chinese, Saudi Arabian, and UAE cash deposits, along with raising new loans from foreign commercial banks, is crucial for the International Monetary Fund’s (IMF) approval of a $7 billion bailout package.

The government had planned to roll over $5 billion in Saudi debt and $4 billion in Chinese debt, with the $3 billion UAE deposit listed on the central bank’s balance sheet. However, the report confirmed that no disbursements were made against these loans in July.

The IMF’s Extended Fund Facility (EFF) assumes that Pakistan will maintain timely external and domestic debt repayments. The $12 billion cash deposit rollover and $4 billion commercial loan are critical components of the IMF’s debt sustainability plans, yet both the IMF and the government have avoided addressing the need for debt restructuring.

Reports suggest that if Pakistan finalizes the sale of 15% shares in the Reko-Diq mining project by early September, Saudi Arabia might expedite the $5 billion rollover request and approve an additional $1.2 billion oil financing facility.