ISLAMABAD - Pakistan had received $13.547 billion loan from international lenders while debt servicing of foreign loans amounted to $7.397 billion during previous financial year 2020-21.
“During FY2020-21, the government of Pakistan signed new agreements worth $15,316 million with various bilateral and multilateral development partners, State Administration of Foreign Exchange (SAFE) Authority China and foreign commercial banks, and received disbursements worth $13,547 million from bilateral and multilateral partners, SAFE Authority China, foreign commercial banks, IMF and Eurobonds,” Ministry of Economic Affairs said in its report, ‘Year book 2020-21’.
Pakistan had borrowed $454 million from bilateral development partners; $4.373 billion from multilateral development partners, $4.72 billion from foreign commercial banks, $2.5 billion from issuing Eurobonds, $1 billion from SAFE Authority and $500 million from the International Monetary Fund (IMF) during the previous fiscal year.
According to the report, the EAD is responsible for making timely debt-servicing (principal repayments and interest payments) of foreign loans. Actual debt servicing of foreign loans during financial year 2020-21 amounted to $7.397 billion, comprising $7.267 billion central loans and $130 million guaranteed loans. Central loans were 98.24 percent of the total debt servicing of external loans. Out of the total debt-servicing of $7.397 billion, $5.912 billion comprised principal repayment and $1.485 billion constituted interest payments. About 4.46 percent ($330 million) of the total debt servicing went to the bilateral creditors and 95.54 percent ($7.067 billion) to the multilateral creditors. About 89.20 percent ($6.599 billion) was against medium & long-term loans while 10.79 percent ($798 million) was against short-term loans.
The report also explained about the Debt Service Suspension Initiative. One of the tasks performed by the Debt Management Wing of EAD is rescheduling of debt. In the wake of Covid-19 pandemic, the G-20 announced the Debt Service Suspension Initiative (DSSI) which allowed developing countries to seek debt relief through rescheduling its principal and interest payments due to its bilateral creditors between the period from May 2020 to December 2021. The government of Pakistan applied for debt rescheduling under the G-20 DSSI framework to avail a total suspension of $3.785 billion (estimated) in this period. It was primarily due to this initiative that debt servicing to bilateral creditors amounted merely 4.46 percent of the total debt servicing made in the financial year 2020–21
From the total expected debt rescheduling of $3.785 billion, a total of $2.331 billion was rescheduled during the financial year 2020 – 21, for which 54 agreements with a total of 21 bilateral creditors have been signed and the remaining agreements are under negotiation.
The report also stated about the budget estimates for the current fiscal year 2021-22, which has been finalized at $5.718 billion after project wise detailed deliberations with the respective Policy Wings of Ministry of Economic Affairs as per following details multilateral $5.406 billion and bilateral $312 million.
In multilateral sources, the ADB would give $1.616 billion, World Bank $1 billion and IsDB (Short-term) $1 billion during the current fiscal year.