Pakistan secures $4.25 billion in foreign loans in four months to build foreign exchange reserves

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ISLAMABAD – Pakistan has secured $4.255 billion in foreign loans over four months (July-October) of the current financial year (2022-23) to build up its foreign exchange reserves, which are declining mainly due to the repayment of earlier loans. The government has planned foreign aid of $22.8 billion for the current fiscal year. Meanwhile, it received 18.7% ($4.255 billion) of the annual four-month $22.8 billion of 2022-23. According to the latest data from the Ministry of Economic Affairs, the government received $2.017 billion in external loans in October 2022, mainly $1.522 billion from Asian Development Banks (ADBs). The country has drawn $1.166 billion from the International Monetary Fund (IMF), $2.322 billion from multilateral sources and $497.44 million from bilateral sources and $200 million from foreign commercial banks, for a total loan disbursement of $4.255 billion between July and September of FY23. Meanwhile, the Asian Infrastructure Investment Bank (AIIB) has approved $500 million for Pakistan in the current month (October). The government also expects to receive $450 million from the World Bank in the current month as Pakistan has met all the conditions related to the Resilient Institution for Sustainable Economy (RISE-II) program. The Asian Infrastructure Investment Bank (AIIB) will grant co-financing approval of $450 million, so that total financing of $900 million will be provided to Pakistan. The inflow would help build up the country’s foreign exchange reserves, which had dwindled in recent months due to the repayment of earlier loans. The total liquid foreign exchange reserves held by the country stood at $13.796 billion as of November 11, 2022. The foreign exchange reserves held by the State Bank of Pakistan stand at $7.959 billion and foreign exchange reserves net assets held by commercial banks at $5.836 billion. The government has budgeted foreign aid of $22.8 billion for the current fiscal year, including $7.5 billion from foreign commercial banks, $22.655 billion in loans and $161.46 million in grants. China shelled out $54.93 million in the first four months of the current fiscal year against the government’s budget estimate of $49.02 million for the current fiscal year. Saudi Arabia disbursed $400 million under the Deferred Oil Payment Facility of the $800 million budgeted. The United States disbursed $10.34 million during the reporting period compared to $32.49 million budgeted for the current fiscal year. Korea disbursed $16.63 million and France $8.4 million during the July-October period of the current fiscal year. In the multilateral sector, the Asian Development Bank (AfDB) disbursed 1.635 billion dollars out of the 3.202 billion dollars budgeted for the current financial year. IDA disbursed $459.25 million of the $1.4 billion budgeted, IBRD $41.89 million of the $1.246 billion budgeted and the Islamic Development Bank disbursed $13.9 million of the $3.38 million budgeted for the current fiscal year. Pakistan’s debt keeps growing. The latest SBP data showed Pakistan’s debt and liabilities stood at 62.46 trillion rupees in July-September for the financial year 2023, compared to 50.49 trillion rupees in the same period of the year. ‘Previous exercice. The country’s debt rose by 24.7% to 59.37 trillion rupees, while total liabilities increased by 23% to 3.56 trillion rupees.

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