ISLAMABAD: The country received foreign assistance of $16.974 billion while it signed new agreements worth $15.722 billion in the fiscal year 2021-22, says the Economic Affairs Division (EAD).
The Division in its annual report 2021-22 stated that borrowing can be productive for the economic growth of developing countries as long as the economic returns are higher than the cost of borrowed funds. While external debt is useful for the growth of the economy, dependence on external debt must be closely monitored and managed.
The report further noted that a prudent external debt management strategy coupled with strong institutional arrangements is necessary for managing the external debt and improving the repayment capacity of the country. Debt can be productive if it is used for creating assets that generate positive returns and externalities.
EAD stated that disbursements of $16.974 billion during July 2021 – June 2022 were mainly under the projects and programmes loans/grants from multilateral, bilateral development partners and financial institutions.
The composition of disbursements includes: a) $4.873 billion or 29 per cent from foreign commercial banks; b) $4.828 billion or 28 per cent from the multilateral development partners, mainly ADB, World Bank, and IsDB; c) $3 billion or 18 per cent under SFD Time deposits; d) $2.231 billion or 13 per cent from bilateral development partners particularly China and Saudi Arabia; e) $2 billion or 12 per cent from international bond holders.
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Amongst multilateral development partners, the ADB, the World Bank and the IsDB were the largest development partners with disbursements of $1.626 billion, $1.586 billion and $1.406 billion (10 per cent, nine per cent and eight per cent of total disbursements) respectively. On the bilateral side, China disbursed the largest amount of $1.685 billion followed by Saudi Arabia with $401 million.
As of 30th June 2022, the total external debt of the government was $88.836 billion. Around 70 per cent of the total external public debt were obtained from multilateral and bilateral sources having concessional terms and longer maturity, the report noted. The government paid an amount of $12.378 billion from July 2021 to June 2022 on account of debt servicing of external public loans. This consists of principal repayment of $10.355 billion and interest payments of $2.023 billion.
For the period under review, net transfers to the government’s external public debt were $6.380 billion.
In the fiscal year 2021-22, the government of Pakistan signed new agreements worth $15.722 billion as commitments - $4.722 billion with foreign commercial banks - $3.561 billion with multilateral development partners - $2.396 billion with bilateral development partners -$3 billion as SFD time deposits - $2 billion committed as Eurobonds.
Among the multilateral development partners, the following emerged as the largest partners in terms of new commitments of the FEA, during the period under review: the ADB with $1.783 billion (50 per cent of multilateral partners), the Islamic Development Bank $1.134 billion ($881 million as short term and $252 million as long term), the World Bank committed $341 million (10 per cent of multilateral partners).
Copyright Business Recorder, 2022