Home New loan $2.355 billion in new loan agreements signed in Q1 – Pakistan

$2.355 billion in new loan agreements signed in Q1 – Pakistan


ISLAMABAD: The Government of Pakistan has signed new loan agreements worth $2.355 billion with various bilateral and multilateral development partners, and foreign commercial banks in the 1st quarter of the current fiscal year 2021- 22, revealed the Ministry of Economic Affairs.

According to official data, of the total new agreements, $628 million in financing agreements were signed with multilateral development partners and $686 million with foreign commercial banks.

He further revealed that the government had received $1.42 billion from the international capital market through automatic issuances. The Eurobonds were issued at the premium amount of $42 million.

Among multilateral development partners, the AfDB emerged as the largest partner in terms of new External Economic Assistance (EFA) commitments of $500 million (21% of total commitments), followed by the World Bank.

Of $2.355 billion, $1,727 million (or 73% of total commitments) was earmarked for program financing through foreign commercial banks and Eurobonds. An amount of 628 million dollars (or 27% of the total) has been allocated to finance the project. No funds were committed for the financing of raw materials in the 1st quarter.

During the reporting period, the government committed $628 million in project funding for the procurement of Covid-19 vaccines and the education and training sector of the economy. The AfDB has committed $500 million against the “Covid19 Vaccine Support Project”.

An additional $127 million has been committed by the World Bank to fund a project called “Sindh Early Learning Enhancement through Classroom Transformation (SELECT)”, earmarking 20% ​​of the project funding for education and training.

Disbursements of $3.216 billion between July and September 2021 were mainly for loan/grant projects and programs from multilateral and bilateral development partners and financial institutions.

The composition of disbursements is as follows: (a) US$1,597 million, or 50% of total disbursements, came from multilateral development partners, mainly AfDB, World Bank and IDB; (b) $468 million, or 15% of total disbursements, came from foreign commercial banks. (c) $1,000 million, or 31% of total disbursements, came from international bondholders; (d) $109 million, or 3% of disbursements, came from bilateral development partners, particularly China, the United States and the United Kingdom.

About $1,597 million (50% of disbursements) came from multilateral development partners and a disbursement of $1,000 million (31% of total disbursements) came from bondholders. Among multilateral development partners, the World Bank and AfDB were the main development partners with disbursements of $529 million and $461 million (16% and 14% of total disbursements), followed by IDB and the AIIB. China was the largest among bilateral partners disbursing $73 million, or 67% of the total bilateral development partner share of $109 million.

An amount of 468 million dollars (or 22% of the total) was obtained from foreign commercial banks and 796 million dollars (or 38% of the total) in the form of project financing. The remaining 21% of disbursements were for commodity financing.

During Q1 2021-22, the largest share of disbursements, 37% of the total, was received for Covid19 funding needs. On the other hand, the most important sector in terms of disbursements is that of energy and electricity, with a share of 24% in the total aid to the project of 853 million dollars, followed by transport and communications (11% share), transport and communications (11% share), and land use planning and housing (six percent share of total project aid).

As of September 30, 2021, Pakistan’s total external public debt stood at $86.8 billion. Pakistan’s external public debt comes from three main sources, namely multilateral external debt accounting for 41% of the share of total external public debt (including IMF financing), followed by bilateral external debt (24% of total ) and foreign commercial debt. banks (11% share of the total).

The remaining 16% of external public debt is made up of the State Administration of Foreign Exchange (SAFE), China deposit and Eurobonds (including sukuk).

The government paid an amount of $1,353 million between July and September 2021 in debt service for external public borrowings. This includes principal repayment of $1,036 million and interest payments of $317 million.

During the period under review, the bulk of repayments were made to foreign commercial banks, with a 32% share of total repayments, followed by the World Bank (22% share), AfDB (20% share) and China (14% share). generally).

For the period under review, net transfers to the government’s external public debt were $2,065 million, compared to $1,408 million during the corresponding period last year. The share of longer-term concessional external loans increased by $1,145 million (multilateral and bilateral loans) and the share of commercial borrowing increased by $1,143 million, including net borrowing of $143 million from commercial banks and $1,000 million from Eurobonds.

Copyright Business Recorder, 2022