Pakistan’s foreign borrowing reached $9.2 billion during the first seven months (July-Jan) of the ongoing fiscal year FY2023-24, a figure that barely met its financing requirements and failed to increase its foreign exchange reserves.
The loans were primarily obtained for budget support, balance of payments assistance, and project funding.
The Economic Affairs Division revealed these figures for July-January of fiscal year 2023-24 shortly after the Ministry of Finance reduced its foreign loan forecast by 35%.
Besides acquiring $9.2 billion in foreign loans, the country secured an additional $6 billion through deposit rollovers from Saudi Arabia, China, and the UAE, totaling $15.1 billion or 60% of its required funding.
The International Monetary Fund (IMF) adjusted Pakistan’s total financing needs to $25 billion due to a smaller current account deficit and the rescheduling of $1.2 billion in debt guaranteed by China.
Despite receiving over $1 billion in January, including a $700 million tranche from the IMF, the central bank’s foreign exchange reserves remained at approximately $8 billion.
The Finance Ministry did not secure any foreign commercial loans in this period, missing its $4.5 billion target. With certain Chinese loans contingent on prior agreements and others seeking renewal, the financial situation remains precarious.
Pakistan hopes to receive a total of $5.2 billion from multilateral creditors this fiscal year, with the World Bank and IMF being significant contributors.
However, the government has struggled to fully realize pledges for flood victims, with limited disbursements from the Islamic
The Asian Development Bank disbursed $611 million, and bilateral loans excluding rollovers, amounted to $734 million, with Saudi Arabia being a major contributor giving the highest amount of $595 million under the oil financing facility.
