Govt struggles to secure loans from global lenders

Foreign loans fall by $5b YoY because of impasse with IMF

ISLAMABAD:

The government faced difficulties in obtaining funds from international partners and lenders during first three quarters of the current financial year mainly because of unresolved issues with the International Monetary Fund (IMF), sources said on Friday.

According to statistics issued by the Economic Affairs Division, the country received foreign loans worth $7.76 billion during July-March period of fiscal 2022-23, which is nearly $5 billion short of $12.7 billion received in the same period of fiscal 2021-22.

The fall is attributed to the non-renewal of the IMF programme, according to the sources. Because of the delay in finalising the deal with the global lender, Pakistan faced difficulties in obtaining international loans, they said.

According to the Economic Affairs Division’s monthly report on loans, the country received $4.2 billion in loans from the international financial institutions in the first 9 months of the fiscal year. This includes $358.7 million received in the month of March.

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In the fiscal year – July 2022-June 2023 – the government expected to receive a total $22 billion dollars in foreign loans. However, the amount received so far is one-third of the expected funds, with only three months remaining in the fiscal year.

The Economic Affairs Division’s report stated that the Asian Development Bank (ADB) provided a loan of $1.94 billion, the World Bank gave a loan of over $1.1 billion and the IMF provided more than $1.16 billion.

Besides, according to the report, Saudi Arabia had been the major contributor to Pakistan’s borrowing. Riyadh gave a loan of over $880 million, another $780 million for oil facility and $100 million in project financing to Islamabad, the report added.

It said that Pakistan received a loan of $900 million from commercial banks, while more than $610 million were raised through the Naya Pakistan Certificate.