Pakistan signed new loan agreements worth $2.166 billion between July and March of the 2023-24 fiscal year, according to data from the Economic Affairs Division (EAD).
The agreements include commitments from key multilateral partners, with the World Bank leading at $888 million, followed by the Asian Development Bank (ADB) with $706 million, and the Asian Infrastructure Investment Bank (AIIB) with $250 million.
Besides this, Pakistan received disbursements totaling $6.904 billion during the July-March period, primarily through project and program loans and grants from multilateral and bilateral development partners, as well as international financial institutions (IFIs).
The World Bank, ADB, and AIIB were the largest contributors, disbursing $1,482 million, $666 million, and $304 million respectively. Among bilateral partners, Saudi Arabia led with $657 million in disbursements, followed by China at $576 million.
The disbursements were allocated to various sectors, with $404 million directed towards energy and power projects, $234 million for flood-related initiatives, $200 million for construction, $155 million for agriculture, $154 million for transport and communication, $144 million for health and nutrition, $105 million for governance research and statistics, $97 million for water, and $61 million for physical planning and housing.
The EAD emphasised the importance of a prudent external debt management strategy and strong institutional frameworks to effectively manage the country’s external debt and enhance its repayment capacity.
The Division highlighted that borrowing can be productive for economic growth, provided the returns on investments exceed the cost of borrowed funds. However, reliance on external debt requires careful monitoring and management.
As of March 31, 2024, Pakistan’s total external public debt stood at $86.683 billion. The government paid $8.086 billion in external debt servicing during the July-March period, with $5.363 billion allocated to principal repayments and $2.723 billion to interest payments. Net transfers to the government’s external public debt resulted in a positive balance of $909 million.
