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ISLAMABAD: The government, during the second quarter of fiscal year 2020-21, signed new loan agreements worth $6.517 billion with various development partners, SAFE deposits and foreign commercial banks.

This has been revealed in the Economic Affairs Ministry’s quarterly report, released here Thursday.

Out of total new agreements, $3.458 billion worth of financing agreements were signed with multilateral development partners, $2.010 billion with foreign commercial banks, $1 billion as SAFE deposit, and $49 million with bilateral development partners.

Around $2.010 billion worth of agreements, which constituted 31 percent of the total new commitments, were commercial borrowing.

This financing was arranged to refinance maturing commercial debt.

An amount of $1,000 million (15 percent) has been arranged from China SAFE authority to repay deposit to a friendly country.

After commercial banks and SAFE Deposit, World Bank emerged as the largest development partner in terms of new commitments of the FEA (34 percent) followed by the Asian Development Bank (nine percent), Islamic Development Bank (six percent), and Asian Infrastructure Investment Bank (four percent).

During the period, an amount of $4.382 billion has been committed as budgetary support; of which $1.363 billion was committed by multilateral development partners as programme financing.

The programme financing has been arranged to broaden and deepen the financial system, improve fiscal management and regulatory framework to foster growth and competiveness in Pakistan.

Japan has also committed to provide grant of $9.7 million to combat COVID-19. The remaining amount of $2.010 billion was arranged from foreign commercial banks and $1,000 million from SAFE authority.

An amount of $1.749 billion was allocated for project financing.

The remaining amount of $386 million has been arranged for the commodity financing purposes.

The commitments are planned to be disbursed over the time span of five to six years.

Disbursements of $5.7 billion during July-December 2020 were mainly under the projects and programmes loans/grants from multilateral, bilateral development partners and financial institutions.

The composition of disbursement is as follows: a) USD 2,387 million or 42 percent of total disbursements were from the multilateral development partners, mainly Asian Development Bank, World Bank, Islamic Development Bank and Asian Infrastructure Investment Bank; b) USD 2,054 million or 36 percent of total disbursements were from foreign commercial banks. c) USD 1,000 million or 18 percent of total disbursement were from SAFE deposit. d) USD 260 million or five percent of the disbursements were from bilateral development partners particularly, China, France, USA, and the UK.

As of 31st December, 2020, Pakistan’s total external public debt stands at USD 82.2 billions.

The composition of external public debt demonstrates that Pakistan’s external public debt is derived from three key sources.

Major source is multilateral debt (comprising of 50 percent inclusive of IMF), followed by bilateral 27 percent, and foreign commercial banks 11 percent, while remaining 13 percent of debt consists of SAFE.

As of 31st December, 2020, 70 percent of total external public debt consists of loans on fixed interest rates, while 30 percent loans are obtained on floating interest rates.

Government paid an amount of USD 3,398 million during July-December 2020 on account of debt servicing of external public loans.

It consists of principal payment of USD 2,680 million and interest payment of USD 718 million.

Copyright Business Recorder, 2021

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