ISLAMABAD: The government during fiscal year 2020-21 signed new agreements worth $8.276 billion with various development partners, SAFE deposits and foreign commercial banks. The commitments are planned to be disbursed over the time span of five to six years.
This has been revealed in the Economic Affairs Ministry's "Quarterly Report on Foreign Economic Assistance" released on Thursday. Out of total new agreements, $3.988 billion worth of financing agreements were signed with multilateral development partners, $3.110 billion with foreign commercial banks, $1,000 million as SAFE deposit, and $178 million with bilateral development partners.
Around $3.11 billion worth of agreements, which constituted 38 percent of the total new commitments, were commercial borrowing. This financing was arranged to refinance maturing commercial debt, stated in the report.
An amount of $1,000 million (12 percent) has been arranged from China SAFE authority to repay deposit to a friendly country. After commercial banks and SAFE Deposit, the World Bank emerged as the largest development partner in terms of new commitments of FEA (30 percent) followed by the Asian Development Bank (seven percent), Islamic Development Bank (six percent), and Asian Infrastructure Investment Bank (four percent).
During the period, an amount of $4.527 billion has been committed as budgetary support, of which $1.417 billion was committed by multilateral development partners as programme financing. The remaining amount of $3.11 billion was arranged from foreign commercial banks.
An amount of $2.269 billion was allocated for project financing. Further, $1,000 million has also been arranged from SAFE authority. The remaining amount of $480 million has been arranged for the commodity financing purposes. Disbursements of $7.4 billion during July 2020-March 2021 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) $2.935 billion or 40 percent of total disbursements were from the multilateral development partners, mainly the Asian Development Bank, the World Bank, the Islamic Development Bank, and the Asian Infrastructure Investment Bank; (b) $3.12 billion or 42 percent of total disbursements were from foreign commercial banks; (c) $1,000 million or 13 percent of total disbursement were from SAFE deposit; and (d) $358 million or five percent of the disbursements were from bilateral development partners particularly China, France, USA and the UK.
As of 31st March, 2021, Pakistan's total external public debt stands at $81.2 billion. 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 50 percent inclusive of the IMF), followed by bilateral 26 percent and foreign commercial banks 11 percent, while remaining 13 percent of debt consists of SAFE deposit and Bonds (inclusive of Sukuk).
As of 31st March, 2021, 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 $5.419 billion during July 2020-March 2021 on account of debt servicing of external public loans.
It consists of principal payment of $4.374 million and interest payment of $1.045 billion. During the period majority of repayments were made against the commercial banks (48 percent), followed by the IDB (15 percent), the ADB (14 percent), the World Bank (12 percent), bonds (four percent), and China (three percent).
For the period under review, net transfers to the government debt were $2.850 billion. An amount of $1,000 million was arranged from SAFE authority to repay deposit received from a friendly country. If that amount is excluded, then net transfers will be $1.850 billion.
The share of concessional external loans with longer maturity increased by $1,074 million (multilateral and bilateral loans) and the share of commercial borrowing has increased by $776 million.
Copyright Business Recorder, 2021