ISLAMABAD   -   Pakistan has borrowed $2.25 billion loan from multilateral and bilateral sources in first two months (July and August) of the current fiscal year. The latest data of Ministry of Economic Affairs showed that the government has received $2.25 billion external inflows external inflows from multiple financing sources on July to August period of the year 2020-21, which are 18 per cent of annual budget estimates. In Annual budget 2020-21, the federal government had budgeted to borrow $12.23 billion for the entire current fiscal year from multilateral and bilateral sources and banks.

The amount of borrowing $2.25 billion in two first months of the current fiscal year is higher than the borrowing made in corresponding period of the last year when the government had taken $1.659 billion. The Ministry of Economic Affairs said that in the aftermath of COVID-19 and its persistence in the country the disbursements of project financing from development partners dried up during the last quarter (April to June) of the previous fiscal year 2019-20. The pandemic has closed down most of the economic activities across the country including development project activities. However, after the ease in the lockdown by the Government the economic activity is reviving which may lead to jack-up the project financing in the current fiscal year 2020-21.

The breakup of $2.25 billion loan showed that government has taken $961 million or 44 per cent as programme/budgetary support assistance. Around $149 million (7 per cent) as foreign commercial borrowing to repay maturing international Sukuk and other foreign commercial loans and $138 million (6 per cent) as project assistance to finance its development projects activities for improving the socio-economic development of the country and for asset creation and $1,000 million received in terms of time safe deposits.

The bilateral and multilateral development Partners have disbursed $1,099 million of foreign economic assistance during July-August of ongoing fiscal year 2020-21 against the budgetary allocation of $5,811 million for fiscal year 2020-21 on concessional terms with longer maturity. Amongst the multilateral development partners, mainly Asian Development Bank provided $259 million. World Bank disbursed $531 million against the budgetary allocation of $2,257 million. While from bilateral sources, France, USA and UK provided $23.7 million, $23.9 million & $07million respectively.

During July 2020 total servicing of external public debt was $484 million against the annual repayment estimates of $10,363 million for the entire fiscal year. Of which, $8,338 million (82 percent of total external public debt servicing) was repaid as principal and $1,802 million (18 percent) as interest on the outstanding stock of external public debt.

Around 65 per cent of total external public debt repaid during July of fiscal year 2020-21 constitutes the repayments of some of the foreign commercial loans and international Sukuk which were obtained/issued by the previous government.  During the fiscal year 2020-21, the government settled $51 million worth of foreign commercial loans. Similarly the government has also repaid $331 million to multilateral and $102 million to bilateral development partners. Considering foreign exchange constraints, financing of development projects and repayments of these huge external public debts compel the incumbent government to further borrow from multiple sources.