By Staff Reporter
ISLAMABAD: Pakistan is set to secure a $9 billion loan rollover from China and Saudi Arabia in the current fiscal year, officials said on Friday, as the country grapples with a hefty repayment schedule and economic headwinds.
The Economic Affairs Division (EAD) briefed the National Assembly Standing Committee on Economic Affairs on its efforts to manage foreign economic assistance, external debt, and project financing.
“Detailed insights were provided into the management of Pakistan’s external debt, including strategies for debt sustainability, risk management, and fiscal prudence,” a government statement said.
Pakistan faces a total repayment of over $20.8 billion this fiscal year.
The division is in talks with the Arab Coordination Group and the Qatar Fund for Development to secure funding for the Diamer-Bhasha Dam project.
“The government expects to receive $500 million from the Islamic Development Bank for oil and commodity loans,” the statement said. “However, Saudi Arabia is currently not in favour of giving Pakistan another loan oil facility.”
The committee was briefed that the Geneva Donor Conference, which was held in January 2023, pledged $10.7 billion in project financing, of which Pakistan has received just $3 billion, mostly in the form of debt instead of grants.
This fiscal year, Pakistan will likely receive $1 billion from the World Bank for the Dasu Hydropower Project, with the first phase of the project expected to be completed by 2027. The Asian Infrastructure Investment Bank will be awarded the construction contract for the N5 project.
Meanwhile, Pakistan’s external financing for the fiscal year 2023-24 has fallen short of its annual target, according to data released by the EAD. The country secured $9.811 billion from multiple financing sources, missing its target of $17.619 billion.
The financing includes $2 billion received from Saudi Arabia as a time deposit and $999.04 million from foreign commercial banks, including China Development Bank. However, the data does not reflect the $3 billion received from the International Monetary Fund (IMF) under the Stand-By Arrangement (SBA) or the $1 billion disbursed by the UAE.
The government had budgeted $4.5 billion from foreign commercial banks but received only $999.04 million. Additionally, no bonds were issued, resulting in no proceeds from this source. Multilateral institutions provided $4.279 billion, while bilateral sources contributed $919.43 million. Non-project aid totaled $6.777 billion, including $5.583 billion for budgetary support, and project aid amounted to $3.033 billion.
China disbursed $508.34 million for the JF-17 B project and $69.14 million for other projects. The Asian Development Bank (ADB) provided $1.327 billion, while Saudi Arabia disbursed $595.18 million for oil facilities and $66.29 million for other projects. The USA contributed $40.18 million, Korea $35.64 million, and France $49.57 million. Other institutions, such as IDA, IBRD, IsDB, AIIB, and IFAD, also provided financing, with amounts ranging from $42.43 million to $344.99 million.
The shortfall in external financing may exacerbate Pakistan’s economic challenges, including a hefty repayment schedule and global economic uncertainty. The government’s ability to secure funding from multiple sources will be crucial in navigating these challenges and achieving economic stability.
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