Foreign banks: reliance on borrowing budgeted at 25 percent of total external assistance

The government reliance on borrowing from foreign commercial banks is budgeted at 25 percent of the total external assistance for 2016-17. Finance Minister Ishaq Dar had budgeted foreign assistance of $7.998 billion for 2016-17 including grants and loans (against $9.18 billion budgeted for 2015-16) which includes borrowing $2.005 billion from foreign commercial banks which extend loans at high rates of interest and a short amortisation period.
The government has borrowed $300 million from Industrial and Commercial Bank of China Limited in the month of January, bringing the total borrowing from commercial banks to $1.2 billion in the first seven months of the current fiscal year. Ministry of Finance had finalised arrangements for $600 million commercial loan from two Chinese banks to be utilised for balance of payments and budgetary support and has so far received $300 million.
Further, the country borrowed $200 million from Noor Bank PJSC against the committed $100 million and $700 million from China Development Bank as non-project aid during the month of September.
In addition, the government issued Sukuk of one billion dollars at a 6.5 percent rate of return during the period under review. The country provisionally received $4.87 billion ie 61 percent of budgeted estimates of foreign assistance from multilateral and bilateral donors in the current financial year (July-February) against $4.62 billion during the same period of last year.
The Economic Affaires Division (EAD) data revealed that China disbursed $175.15 million to Pakistan in the month of February including $106.56 million for Sukkur-Multan (Peshawar-Karachi Motorway) under the China Pakistan Economic Corridor (CPEC) and $68.59 million for Neelum-Jehlum hydro power project. The data shows that government borrowed $5 million from the Eco Trade Bank in the month of February which was not budgeted.
The country received $300.62 million in the month of February including $256.88 million loans and $43.73 million grants. The latest figures show that the country provisionally received $4.632 billion in loans and $238.41 million grant in the current fiscal year.
Pakistan received $1.032 billion from China in the current fiscal year including $175.15 million in the month of February, surpassing the budgeted $572.3 million for the current financial year. The country had received $576 million from China during the same period of last year.
Asian Development Bank (ADB) disbursed $726.56 million in the current financial year including $16.81 million in the month of February against the budgeted estimates of $1048.2 million for the current fiscal year ie 69.31 percent. The government has also borrowed $19 million from Asian Infrastructure Investment Bank (AIIB) in the current financial year which was not budgeted as per the EAD documents.
International Development Association (IDA) disbursed $146.49 million including $14.69 million in the month of February ie 9.9 percent of the budgeted estimates of $1.468 billion, IDB (S-Term) disbursed $212 million ie 47 percent of the budgeted estimates of $452 million and US disbursed $62.28 million including $10.5 million in the month of February ie 56 percent of the budgeted estimates of $111.41 million.
International Bank for Reconstruction and Development (IBRD) disbursed $154.29 million including $10.13 million in the month of February, surpassing the budgeted estimates of $62.48 million for the current fiscal year, UNHCR disbursed $0.49 million, IDB $63.47 million including $33.32 million in the month of February, surpassing the budgeted estimates of $18.82 million for the current fiscal year, Japan disbursed $42.8 million against the budgeted $77.13 million for the current fiscal year and UK released $136.71 million including $5.04 million in February. EU disbursed $17.84 million in the current financial year against the budgeted estimates of $51.12 million.
Multi Donor Trust Fund (MDTF) disbursed $10.45 million in February under the head of grant, brining the total disbursement to $15.98 million in the current fiscal year against the budgeted estimates of $18.75. The country received no assistance from France, Korea, Norway, Oman, Saudi Arabia, UNDP and Organisation of the Petroleum Exporting Countries (Opec) during the period under review.