Pakistan secures $439.3m in two months of FY23

ISLAMABAD: Pakistan’s ability to secure loans and grants dropped significantly as Islamabad could fetch only $439.3 million from international creditors in the first two months of the current fiscal against $2.37 billion in the same period of the last financial year.

This ability declined mainly because Islamabad so far remained unable to generate dollar inflows in the shape of launching international bonds or securing commercial loans in the first two months of the current fiscal year 2022-23. This failure or inability to generate dollar inflows has resulted in putting pressure on the exchange rate whereby the rupee depreciated against the dollar.

However, in the first two months of the last fiscal year 2021-22, Pakistan had raised $1 billion in international bonds, commercial borrowing of $363.26 million, $879.4 million from multilateral creditors, and $91.9 million from bilateral creditors. Now this time, Pakistan has secured $439.3 million in loans from multilateral and bilateral creditors in the first two months (July and August) of the current financial year.

Saudi Arabia has clinched the position of the largest bilateral donor as it disbursed $200 million ($100 million each month) for the Oil Facility (OF) in the first two months of the current fiscal year 2022-23.

In the budget for 2022-23, the government envisaged plans to generate $22.817 billion in the shape of loans and grants from multilateral, bilateral creditors, and commercial loans as well as the launching of international bonds.

According to the compiled data of the Economic Affairs Division (EAD), the government could not generate any penny through international bonds, commercial loans, and IMF loans in the first two months of the current fiscal year. Although, the IMF programme was revived after the completion of the 7th and 8th reviews and an instalment under the Extended Fund Facility (EFF) of $1 billion was also released it was transferred into the SBP account in the first week of September 2022. So, the released amount of $847 million will be shown in next month’s data going to be released by the EAD.

The official data shows that Pakistan secured $206.25 million from multilateral creditors during the first two months of the current fiscal year out of which the Asian Development Bank (ADB) disbursed a total amount of $70.96 million and Asian Infrastructure Investment Bank (AIIB) $2.47 million. The European Union (EU) did not disburse any amount so far in the first two months against making a commitment to release $14 million for the whole financial year 2022-23. The EIB also disbursed zero amount.

Among the multilateral creditors, the World Bank (WB) so far remained the largest creditor so far as it disbursed $100.6 million in the shape of soft lending IDA in the current fiscal year. The WB’s IBRD funding stands at $22.33 million in the first two months of the current fiscal year. Islamic Development Bank so far released $8.85 million loan during the current fiscal year. The WB’s Multi-Donor Trust Fund (MDTF) has disbursed $1 million in the current fiscal year. There are zero disbursed amounts from IFAD, OFID and UNICEF so far in the current fiscal year.

Pakistan has so far obtained $233.07 million from bilateral creditors in the first two months of the current fiscal year. China has disbursed $4.9 million, France $3.21 million, Germany $0.33 million, Japan $0.68 million and Korea $15.65 million in first two months of the current fiscal year.

Saudi Arabia disbursed $200 million for oil facility and US provided $8.3 million in the current fiscal year. Denmark, Italy, Kuwait, Oman and UK did not provide any financial assistance so far in the current fiscal year.

The government envisaged plans to generate $2 billion through the launching of international bonds but so far, no progress could be made on this front. The government plans to raise $7.47 billion through commercial loans in the current fiscal year but it did not generate any penny so far on this account. The government showed zero disbursement from IMF and Naya Pakistan Certificate in the first two months of the current fiscal year.