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ISLAMABAD: Pakistan has received foreign assistance amounting to over $3.55 billion as loans and grants from various bilateral and multilateral development partners to address health-related and socioeconomic challenges caused by the Covid-19 pandemic.

The total public debt stood at 87.1 percent of the Gross Domestic Product (GDP) in the current financial year 2020, while total debt and liabilities stood at 106.8 percent of the GDP.

In a written reply to a question, Minister for Economic Affairs Makhdoom Khusro Bakhtyar told the National Assembly Thursday that the G-20 countries provided relief of $2.013 billion through debt service suspension to provide fiscal relief in the context of Covid-19 pandemic.

He said the external economic assistance provided fiscal space to the government to divert financial resources for saving lives and livelihoods of the people, and mitigate the economic impact of the Covid-19.

He said it also helped to improve foreign exchanges reserves, stabilise exchange rate and build buffers against external economic shocks.

The minister said that external economic assistance provided a fiscal space to the government of Pakistan to divert financial resources for saving lives and livelihood of the common citizens and mitigate socio-economic impact of the Covid-19 pandemic.

He said that the World Bank committed $300 million and disbursed $111 million, the Asian Development Bank committed $350 million and disbursed $129 million, and France committed $47 million and disbursed $22 million.

For budgetary support (loans), the minister said that the International Monetary Fund (IMF) provided $1.386 billion loan to the Finance Division, the ADB gave $500 million, and the Asian Infrastructure Investment Bank (AIIB) provided $750 million loan to Pakistan.

All amounts of three multi-national organisations have been disbursed.

About the grants, the minister stated in a written relay that the ADB had committed $7.78 million grant, while $0.50 million were disbursed, the United Nations provided 0.40 million grant, Japan committed $28.33 million, while $2.87 million were disbursed, China provided $4 million grants, the United States of America (USA) committed $31.87 million and disbursed $20.87 million, the European Union (EU) committed $19.85 million, and disbursed $10.86 million.

In another written reply to the Lower House of the Parliament, the Minister for Finance and Revenue stated that the total debt and liabilities had exceeded the size of the GDP and end June 2019, and it stood at 106.8 percent of the GDP in current fiscal year 2020.

He said that in the previous financial year 2019, the total debt and liabilities stood at 105.9 percent.

He said that the public debt stood at 87.2 percent of the GDP in the current fiscal year, while it was 86.1 percent of the GDP in the previous year.

The minister said that the total debt and liabilities increased by Rs10.33 trillion, and Rs4.10 trillion during financial year 2018-19 and FY 2019-20 respectively. However, he said that that it was important to highlight that total debt and liabilities included government debt as well as borrowing of other sectors, which were not liabilities of the government of Pakistan such as the private sector, banks, foreign exchange liabilities etc.

He said that the government inherited extremely challenging macro-economic situation marked by high fiscal deficits and debt levels.

He said that the situation further exacerbated due to decrease in foreign exchange reserves, which contributed to a sharp devaluation of Pakistani rupee and inflationary pressure, which led to a tight monetary policy stance significantly increasing the debt levels and servicing cost.

He said that however, the government was taking various policy initiatives to address those challenges through a combination of greater revenue mobilisation, rationalisation of current expenditure, and efficient/productive utilisation of debt.

Copyright Business Recorder, 2020