Foreign loan inflows fall by a quarter – Business

ISLAMABAD: Pak­istan has received almost $12bn foreign loans in the first eight months (July-February) of 2024-25, aiming to cross the $19.2bn target by June 30.

While half of this portfolio was legacy rollovers from China, Saudi Arabia, and the United Arab Emirates, fresh loans and grant inflows amounted to $5.95bn in eight months, almost 25pc lower than the comparable period of last fiscal year.

In its monthly report on Foreign Economic Assis­tance (FEA) released on Wednesday, the Economic Affairs Division (EAD) said that against its annual target of $19.4bn (including grants), total FEA in 8MFY25 amounted to $4.953bn when compared to $6.678bn in the same period last year with the annual target of $17.6bn.

This does not include about $1bn disbursed by the IMF in October 2024 as an upfront payment under the $7bn ongoing EFF that is accounted for separately by the State Bank of Pakistan. However, $1.2 billion was received a year back under the Standby Arrangement (SBA), which had also seen similar accounting treatment.

Pakistan receives $5.95bn in July-Feb FY25

With three rollovers and fresh disbursements, the total external assistance in eight months amounted to $11.95bn. This included $3bn rollovers by Saudi Arabia, $2bn by UAE and $1bn by China. This does not include another $2bn China rolled over earlier this month, making its total rollovers to $3bn thus far. Pakistan has a total annual rollover portfolio of about $12.7bn in safe deposits and loans from these three countries, leaving the country’s net international reserves (NIR) at a substantial deficit.

The FEA recorded by the Economic Affairs Division showed inflows fell by about 26pc to about $4.95bn in July-February FY25, apparently because of delayed IMF bailout and subsequent $1bn disbursements. Last year, inflows amounted to $7.88bn in the same period, including inflows from the IMF.

In February, the EAD reported inflows at $365m compared to $830m in January.

The EAD said that out of $4.95bn, about $2.74bn was received for budgetary support or programme loans and the remaining $2.2bn for project financing. During the same period last year, EAD secured about $5.14bn as project aid and $1.8bn in project loans.

Of the total, inflows from multilaterals stood at $2.49bn in 8MFY25 compared to $3.8bn a year ago, while bilateral disbursements stood at $334m against $949m.

The EAD reported receiving about $500m from foreign commercial lenders (UAE-based) in 8MFY25, showing a minor recovery from commercial banks that had stayed away from financing Pakistan last year. It may be noted that the government has budgeted $3.8bn from foreign commercial banks for the current year, showing a poor start, again due to the delayed IMF umbrella.

The government has projected $1bn from international bonds and $9bn inflows from bilateral partners — China and Saudi Arabia — for the current fiscal year. These projections include $5bn time deposit from the Kingdom of Saudi Arabia and $4bn China’s SAFE deposit. These projections are critical for Pakistan to meet its external financing gap as part of the IMF programme.

In addition, Pakistan also received $1.3bn from overseas Pakistanis through Naya Pakistan Certificates compared to $590m. The Asian Development Bank led the multilaterals with $1.098bn disbursement compared to its $1.93bn in 8MFY24. The World Bank provided $849m in eight months.

Published in Dawn, March 20th, 2025