Foreign Loans Decline by 36% in 11 Months Amid IMF Holdout. Pakistan is making significant efforts to secure a bailout from the International Monetary Fund (IMF) during the Paris summit this week. The government’s borrowing has witnessed a substantial decline of 36 percent, amounting to $8.613 billion, during the first eleven months (July-May) of 2022-23, in contrast to $13.539 billion borrowed in the corresponding period of the previous fiscal year.
Efforts to Secure IMF Bailout
Prime Minister Shehbaz Sharif, as reported by the media, has sought a meeting with the managing director of the IMF during the Paris summit to discuss a new Global Financial Pact. These discussions aim to reinforce Pakistan’s request for financial assistance.
Borrowing Details and External Loans
It’s worth noting that the aforementioned borrowing figure of $8.613 billion does not include the rollover of deposits from friendly countries, totaling $6 billion, with $3 billion contributed by China and Saudi Arabia each. Additionally, the refinancing of a Chinese loan amounting to $1.3 billion is not included in this borrowing figure.
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According to data from the Economic Affairs Division, Pakistan acquired $900 million from foreign commercial banks throughout the first 11 months of the current fiscal year, with $700 million obtained in February. However, there were no borrowings from foreign commercial banks in May 2023. In comparison, the country received $2.623 billion from foreign commercial banks during the same period in the previous year.
IMF Loans and Inflow Slowdown
During the first 11 months of 2022-23 (July-May), Pakistan received $1.166 billion from the IMF. Interestingly, the Economic Affairs Division has, contrary to past practices, listed the loans obtained from the IMF separately. If we exclude the IMF loan, the total inflow for the current fiscal year’s first 11 months amounts to $7.447 billion. This figure signifies a slowdown in inflows when compared to the $13.539 billion received during the same period in the last fiscal year.
Recent External Loans and Budgeted Assistance
In May 2023, the government secured external loans worth $491.69 million. Moreover, during the first 11 months of the current fiscal year, the country received $742.94 million through the “Naya Pakistan Certificate,” with $65.70 million acquired in May 2023.
For the ongoing fiscal year, the government has allocated $22.817 billion in foreign assistance, including $7.5 billion for foreign commercial banks.
Sources of Financial Assistance(IMF)
From July to May 2022-23, Pakistan received financial assistance from various sources. The breakdown is as follows:
Multi-lateral institutions contributed $4.453 billion.
Bilateral sources provided $1.350 billion.
The IMF disbursed $1.166 billion.
Non-project aid amounted to $6.816 billion, of which $5.557 billion was allocated for budgetary support.
Project aid accounted for $1.796 billion.
Disbursements from Asian Development Bank (ADB) and China
During the review period, the ADB disbursed $2.036 billion, slightly lower than the budgeted amount of $3.202 billion for the entire fiscal year. In May 2023, the ADB disbursed an additional $61.66 million.
China’s disbursements during the first 11 months of the current fiscal year reached $128.03 million, including $0.14 million