Govt secures $11.7bn in foreign loans, falling short of $17.4bn target M Haris

Pakistan secured $11.7 billion in foreign loans and grants during the first 11 months of FY24, falling short of the annual target of $17.4 billion, according to data from the Ministry of Economic Affairs (MEA). 

The MEA reported that Pakistan received $403 million in foreign assistance in May, an increase from $237 million in April. Cumulatively, the country obtained $7.547 billion in foreign economic assistance (FEA) during 11 months, amounting to 44% of the annual budget target.

Including $3 billion from the International Monetary Fund (IMF) under the Stand-By Arrangement and $1 billion from the United Arab Emirates, total foreign inflows reached $11.7 billion, approximately 67% of the full-year target.

The government adjusted the FEA target to around $11 billion due to better debt and trade management, despite initially setting a target of $17.62 billion based on a lower current account deficit.

The Ministry of Economic Affairs’ monthly report for May, released after a delay, indicated a 12.4% decrease in foreign inflows compared to the same period last fiscal year. This decline is due to the challenging international environment and Pakistan’s poor credit rating, which hindered access to international capital markets.

In December 2023, disbursements were secured from multilateral sources, including $638 million from the World Bank, $469 million from the Asian Development Bank (ADB), and $255 million from the Asian Infrastructure Investment Bank (AIIB). Major inflows occurred in July 2023 and April 2024, following agreements with the IMF.

During 11MFY24, Saudi Arabia contributed $2.66 billion through a time deposit and oil facility, while the World Bank provided $1.714 billion, ADB $766 million, and China National Aero-Technology Import & Export Corporation (CATIC) guaranteed a $508 million loan to the Pakistan Air Force.

Despite these inflows, the total foreign assistance fell short of the budgeted $17.62 billion, reflecting ongoing financial challenges. The government received $4.98 billion for budgetary support and $2.566 billion as project aid during the period.