Pakistan Secures $22.5 Billion in Foreign Loans in FY22

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ISLAMABAD: Pakistan secured foreign loans totaling $22.5 billion in the last fiscal year 2021-2022, out of which it secured $2.24 billion in very expensive commercial loans last month (June 2022) to avoid the depletion of currency reserves at an accelerated rate.

Due to the government’s inability to revive the IMF program, Islamabad was unable to generate fiscal/policy loans from multilateral creditors and had to rely on loan disbursements for project financing. In such a scenario, the government would have to rely on commercial loans, bilateral deposits, issuance of international bonds, and secured loans to fill the financing gap.

However, foreign debt repayments and the rising import bill led to the depletion of foreign exchange reserves and foreign exchange reserves fell from $20 billion to less than $10 billion through June 30. 2022. Until July 15, 2022, foreign exchange reserves had further decreased to $9.3 billion.

Among bilateral lenders, Saudi Arabia emerged as the largest lender in the last fiscal year and provided over $400 million in fiscal 2022.

Data from the Economic Affairs Division (EAD) showed the government received a total of $17 billion in loans and grants ($16.98 billion exactly) in the last fiscal year 2021-22 ended 30 June 2022 versus $14.2 billion received in the prior fiscal year 2020-21.

However, according to data from State Bank of Pakistan (SBP), they have received $4.606 billion in Roshan digital accounts, of which $2.9 billion has been received for Naya Pakistan certificate till June 22, 2022. The Pakistan also received a $1 billion tranche from the IMF after completion. of the 6th review under the $6 billion Extended Financing Facility (EFF) in February 2022.

According to official data released by EAD, Islamabad received $4.8 billion from multilateral creditors in the last fiscal year, out of which the Asian Development Bank (ADB) disbursed a loan of $1.62 billion. . The Asian Infrastructure Investment Bank (AIIB) disbursed $41.6 million, ECOT/Bank $52.3 million, the European Union (EU) $22.55 million, the Bank’s IBRD $259.6 million, World Bank IDA $1.32 billion, Islamic Development Bank (IDB) $78 million, Islamic Development Bank (short term) $1.327 billion, IFAD $43.13 million, Japan $0.55 million, MDTF $6.1 million and OFID $50 million.

Bilateral donors provided $708 million to Pakistan in the last fiscal year, with China disbursing $162.6 million, France $15.5 million, Germany $16.68 million, Japan 20 million, Korea $5.51 million, Kuwait $0.11 million, Oman $0.75 million, Saudi Arabia $401.09 million, UK $16.01. million and 69.82 million US dollars.

Multilateral and bilateral creditors had provided $5.536 billion in the last fiscal year 2021-22.

The government generated $2.04 billion through international bonds in the last fiscal year. The last PTI-led regime launched both Eurobonds and Sukuk bonds to boost dollar inflows.

Through commercial loans, the government raised $4.863 billion in the last financial year, of which $2.24 billion was generated on its own in June 2022. It seemed that Islamabad had no choice but to generate dollar inflows through this easy way of collecting dollars at a time when foreign exchange reserves were dwindling at a rapid pace.

The government received term deposits of $3 billion in the current fiscal year from Saudi Arabia. The government also generated $1.532 billion in guaranteed loans in the last fiscal year.

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