Pakistan relies on global commercial banks for dollar inflows

A representative imega

ISLAMABAD: Amid the continued stalemate over the revival of the IMF program, Pakistan continues to rely heavily on international commercial banks to generate dollar inflows to avert the depletion of foreign exchange reserves.

Islamabad secured $663.2 million in foreign loans from international commercial banks out of the total loans raised of $802.3 million in November 2021. less than $6 billion under the IMF’s Extended Financing Facility ‘, senior official sources confirmed in an interview with The News here on Thursday. before following a lack of appetite It has now been decided that the bond will be launched during the second half (January-June) of the current financial year.

Against total budget estimates of $14.008 billion for the whole of the 2021-22 financial year, Islamabad has so far generated $4.699 billion in the first five months of the current financial year.

Pakistan was able to increase total dollar inflows in the form of loans and grants to the tune of $4.7 billion ($4.699 billion exactly) in the first five months (July-November) of the current fiscal year 2021-22 versus $4.5 billion generated in the same period last fiscal year. An analysis of official data showed that the government was forced to opt for short-term commercial borrowing in order to bridge the gap and meet its fiscal targets for external inflows on an annual basis.

During the same period of the 2020-2021 fiscal year, the government had received $4.499 billion in external contributions from multiple funding sources, or 37% of the annual budget estimate of $12.233 billion for the whole of the 2020-21 financial year.

In fiscal year 2019-20, external inflows were $3.108 billion, or approximately (24%) of the budgeted annual amount of $12.958 million. The total revenue of $4.499 billion represents $1.3 billion or 29% in the form of programme/budget support to restructure the Pakistani economy; $1.621 billion (36%) in the form of foreign commercial borrowings to repay maturing foreign commercial loans; and $518 million (12pc) in the form of project assistance to finance its development project activities to improve the socio-economic development of the country and for asset creation and $60 million (01pc) in the form of short-term credit while $1 billion (22%) received in terms of security time deposits in the first five months of the last fiscal year 2020-21.

In the first five months of the current fiscal year, the government has generated $128.74 million from bilateral creditors, with China providing $73 million, France $3.5 million, Germany 3 .52 million, Japan $5.15 million, Saudi Arabia $1.09 million, United Kingdom $10.01 million and United States $29.23 million. .

The government had generated $1.04 billion through Eurobond in July 2021, so this amount was also added to the total dollar inflows received in the first five months of the current fiscal year. Through international commercial banks, the government secured $1.529 billion in the first five months of the current fiscal year. The government secured $720 million from Dubai Bank, $478.2 million from Standard Chartered Bank of London and $270 million from the Consortium of Susie AG, UBL and ABL. The government secured $1.998 billion in loans from multilateral creditors in the first five months of the current fiscal year, including $620 million from the ADB, $37.77 million from the AIIB, $115 million from IBRD from the World Bank, $739.15 from IDA loans from the World Bank, $468.3 million from short-term loans from the IDB and many others.

Pakistan’s total foreign exchange reserves stood at $25.027 billion; the foreign exchange reserves held by the SBP amounted to more than 18 billion dollars and the commercial banks to 6.45 billion dollars. During the week ending December 10, 2021, foreign exchange reserves decreased by $90 million to $18.56 billion.

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