Foreign commercial banks: Borrowing accounted for 70pc of total external debt in Jan: EAD

ISLAMABAD: Pakistan’s reliance on borrowing from foreign commercial banks accounted for 70 percent of total external debt incurred in January 2021 - total external borrowing of $959.47 million with foreign commercial banks accounting for $675.39 million.

This was revealed in the Economic Affairs Division data released on Wednesday.

Pakistan incurred foreign debt of $6.661 billion from multiple financing sources in the first seven months (July-January) of 2020-21 including $2.730 billion from foreign commercial banks i.e. 54 percent of total budgeted external loans of $12.233 billion for the entire fiscal year 2020-21.

In the corresponding period of fiscal year 2019-20 the external inflows were $6.282 billion which were around 48 percent of the annual budgeted amount of $12.958 billion.

The total receipt of $6.661 billion constitutes $1.643 billion or 25 percent as programme/budgetary support assistance, $2.730 billion (41 percent) as foreign commercial borrowing, $897 million (13 percent) as project assistance to finance development projects, $391 million (06 percent) as commodity financing while $1 billion (15 percent) received as safe deposits from China.

According to the data, the government procured $2.730 billion loans from foreign commercial banks during July-January 2020-21, including $34.62 million from Ajman Bank, $319.91 million from the Standard Chartered Bank (London) including $100.39 million in January, $815.11 million from Dubai Bank, $190 million were received from the consortium-led by Suisse AG, the UBL, and ABL including $75 million in January, $370 million from Emirates NBD, and $1 billion from the ICBC, China including $500 million in January. The data also reflects $1 billion of safe China deposit.

The bilateral and multilateral development partners disbursed$2.931 billion during the period under review (July-January) 2020-21 against the budgetary allocation of $5.811 billion for fiscal year 2020-21.

Amongst the multilateral development partners, mainly Asian Development Bank provided $1.135 billion andWorld Bank disbursed $834 million against the budgetary allocation of $2.257 billion. While from bilateral sources, France, USA and China provided $34.8 million, $74.4 million and $95.4 million respectively.

According to the EAD data during the first seven months of current financial year total servicing of external public debt was $3.269 billion against the annual repayment estimates of $10.363 billion for the entire fiscal year. Of which, $2.686 billion (82 percent of total external public debt servicing) was repaid as principal and $583 million (18 percent) as interest on the outstanding stock of external public debt. During July-December 2020-21, the government settled $1.579 billion of foreign commercial loans.

For the period July- December, 2020-21, net transfers to the government were $2.885 billion. Positive net transfers came mainly due to higher inflows from multilateral development partners and due to $1,000 million of time safe deposit from China. According to EAD, the stock of external loans which was obtained on market based instruments has increased by $620 million and the share of concessional external loans with longer maturity increased by $1.265 billion.

Copyright Business Recorder, 2021