ISLAMABAD: The country has signed new agreements worth $8.481 billion as commitments during the first half of the current fiscal year 2021-22 including $2.484 billion with foreign commercial banks, says the Economic Affairs Division (EAD).
The Division released the quarterly report on foreign economic assistance for July–December 2021, according to which new agreements signed during the first half of the current fiscal year included $1,956 million with multilateral development partners, $3000 million as safe deposits, $1000 million committed as of Eurobonds and $1,000 million from international capital market through tap-issuance.
Among the multilateral development partners, the banks emerged as the largest partner in terms of new commitments of foreign economic assistance including Islamic Development Bank with $834 million ($762 million as short term and $72 million as long term), ADB with $800 million (40 percent of multilateral partners) and the World Bank (16 percent of multilateral partners).
New commitments are the amounts of foreign economic assistance (FEA) which have been committed by the development partners during the observed time and are likely to be disbursed in the next five to six years. The new commitments are recorded by the EAD after the signing of the “financing instruments” with the development partners.
EAD signs each instrument after rigorous consultations and negotiations with the stakeholders including the Finance Division, Law and Justice Division and relevant sponsoring/ executing agency of federal/ provincial governments. In addition to this, the foreign loans signed by the Finance Division are also recorded in the EAD’s database as “Commitments”. The Finance Division raises funds from the international financial institutions and capital markets in the shape of foreign commercial loans and through issuance of Eurobonds/ Sukuk to stabilize foreign exchange reserves and provide budgetary/ balance of payments support.
Out of the total commitments agreed during Jul-Dec of 2021-22, $7,545 million (or 89 percent of the total commitments) was earmarked as program financing through foreign commercial banks and Eurobonds to broaden and deepen the financial system, improve fiscal management and regulatory framework to foster growth and competitiveness in Pakistan. An amount of $894 million (or 11 percent of the total commitments) was allocated for project financing.
During the period under review, the government committed $894 million as project financing for the procurement of Covid-19 vaccines, Energy/ Power and Education and Training sectors of the economy.
Disbursements of $9,131 million during July–December 2021 were mainly under the projects and programs loans/ grants from multilateral, bilateral development partners and financial institutions.
The composition of disbursements is as follows: a) $2,907 million or 32 percent of total disbursements were from the multilateral development partners, mainly ADB, World Bank, and IsDB; b) $2,032 million or 22 percent of total disbursements were from foreign commercial banks; c) $1,000 million or 11 percent of total disbursement were from international bondholders; d) $150 million or two percent of the disbursements were from bilateral development partners particularly China, USA and the UK; e) $3,000 million or 33 percent of total disbursements were recorded under SAFE deposits. The government paid an amount of $5,039 million during July–December 2021 on account of debt servicing of external public loans. This consists of principal repayment of $4,200 million and interest payments of $839 million. For the period under review, net transfers to the government’s external public debt were $4,772 million.