ISLAMABAD: The country has signed new agreements worth $11.362 billion as commitments during the first three quarters of the fiscal year 2021-22 including $2.484 billion with foreign commercial banks, says the Economic Affairs Division (EAD).
The Division released the quarterly report on foreign economic assistance for July–March 2021-22 according to which the Government of Pakistan signed new agreements worth $11.362 billion as commitments including USD 2,484 million with foreign commercial banks, USD 2,440 million with multilateral development partners, USD 1,397 million with bilateral development partners, USD 3,000 million as safe deposits, and USD 2,000 million committed as of Eurobonds.
Among the multilateral development partners, the following banks emerged as the largest partner in terms of new commitments of FEA during the period under review: ADB with USD 1,105 million (45 per cent of multilateral partners), Islamic Development Bank with USD 1,014 million (USD 762 million as short term and USD 252 million as long term), The World Bank committed USD 321 million (13 per cent of multilateral partners).
New commitments are the amounts of FEA which have been committed by the development partners during the observed time and are likely to be disbursed in the next five to six years.
The new commitments are recorded by the EAD after the signing of the “financing instruments” with the development partners. EAD signs each instrument after rigorous consultations and negotiations with the stakeholders including Finance Division, Law and Justice Division and relevant sponsoring/ executing agency of Federal/ Provincial Governments.
In addition to this, the foreign loans signed by the Finance Division are also recorded in the EAD’s database as “Commitments”. The Finance Division raises funds from the international financial institutions and capital markets in the shape of foreign commercial loans and through the issuance of Eurobonds/ Sukuk to stabilize foreign exchange reserves and provide budgetary/ balance of payments support.
Out of the total commitments agreed during Jul-Mar of FY 2021-22, USD 7,525 million (66 per cent of total commitments) was committed by international financial investors under bonds, commercial banks and safe deposits to strengthen the foreign exchange reserves and stabilize the exchange rate.
While 17% of the commitments were earmarked for commodity financing, followed by project financing with USD 1,275 million. An amount of USD 600 million was committed for program financing through ADB to broaden and deepen the financial system, improve fiscal management and to bring financing sustainability in the energy sector to foster growth in Pakistan.
Disbursements of USD 11,935 million during July–March 2022 were mainly under the projects and programs loans/ grants from multilateral, bilateral development partners and financial institutions.
The composition of disbursements is as follows: a) USD 3,949 million or 33 per cent of total disbursements were from the multilateral development partners, mainly ADB, World Bank, and IsDB; b) USD 2,623 million or 22 per cent of total disbursements were from foreign commercial banks; c) USD 2,000 million or 11 per cent of total disbursement were from international bondholders; d) USD 321 million or three per cent of the disbursements were from bilateral development partners particularly Saudi Arabia, China, and USA; e) USD 3,000 million or 25 per cent of total disbursements were recorded under SFD Time deposits.
The Government paid an amount of USD 9,436 million during July–March 2022 on account of debt servicing of external public loans. This consists of principal repayment of USD 8,137 million and interest payments of USD 1,299 million.
Copyright Business Recorder, 2022
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