IMF deal delay slows down foreign borrowings

The Nation  |  Apr 20, 2023

ISLAMABAD    -    The pace of foreign borrowing has slowed down mainly due to the ab­sence of International Monetary Fund’s loan programme as Pakistan received only $7.76 billion in nine months, which was not enough to build the country’s foreign exchange reserves.

The government had budgeted foreign assistance of $22.817 bil­lion for the current fiscal year. How­ever, it has received only 34 percent ($7.76 billion) of the annual project­ed amount in nine months (July to March) of the current fiscal year due to the suspension of IMF’s loan pro­gramme that dried all the foreign in­flows. The volume of loan was not enough to build the country’s for­eign exchange reserves, which got reduced mainly due to the repay­ment against previous loans.

The inflows are expected to ac­celerate after revival of IMF’s pro­gramme. According to the data of Ministry of Economic Affairs, the country received $4.021 billion from multilaterals and $1.064 billion from bilateral, $900 million from foreign commercial banks, $1.166 billion from IMF and $612.3 million from Naya Pakistan Certificate during Ju­ly-March period of the year 2022-23. The government has received $351.78 million loan in the month of March this year.

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The international lenders are not releasing sufficient funds to Pa­kistan in the absence of IMF pro­gramme. The revival of the IMF pro­gramme would pave way for getting loans from other bilateral and mul­tilateral sources. However, the IMF programme has yet to revive despite the government had taken prior ac­tions including increasing gas and electricity prices, announcing mini budget and enhancing interest rate. Recently, the friendly countries in­cluding Saudi Arabia and Arab Emir­ates (UAE) have given confirmation to Pakistan about financial inflows. Saudi Arabia already has confirmed to provide $2 billion, whereas UAE confirmed $1 billion. Now, the gov­ernment expressed the firm hope that after these confirmations, the staff-level agreement would be fi­nalized in the next few days, which would be followed by the IMF Board’s approval.

The data showed that the Asian Development Bank (ADB) disbursed $1.94 billion during the period un­der review compared to the budget­ed $3.202 billion for the entire fiscal year. The ADB disbursed $12.46 mil­lion in March 2023. China disbursed $54.93 million during the first nine months of the current fiscal year against the government budgeted estimates of $49.02 million for the current fiscal year, however, no mon­ey was received in October, Novem­ber, December, January, February and March. Saudi Arabia disbursed $782.28 million for oil payment against the budgeted $800 mil­lion. The USA disbursed $24.27 mil­lion during the period under review against the budgeted $32.49 million for the current fiscal year. Korea dis­bursed $21.31 million and France $29.87 million during the first nine months of the current fiscal year.

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The IDA $1.102 billion against the budgeted $1.4 billion, IBRD $146.99 million against the budgeted $1.246 billion and Islamic Development Bank disbursed $16.81 million against the budgeted $3.38 million for the current financial year. The IsDB (short-term) disbursed $161 million in the current fiscal year. The AIIB disbursed $546.75 million in the current fiscal year so far.

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