ISLAMABAD - The multilateral and bilateral sources are giving loans to Pakistan at much slower pace during ongoing fiscal year mainly due to the absence of International Monetary Fund (IMF) programme.

Pakistan borrowed $2.94 billion loan from multilateral and bilateral sources in eight months (July to February) of the ongoing fiscal year, which were lesser than the need of the government. The $2.94 billion loan disbursements from July through February are equal to only 29.4 percent of the original annual estimates. Pakistan had estimated to receive $10 billion as foreign assistance from bilateral, multilateral and banking sources during FY2019. In February alone, the country had borrowed only $225.15 million from aforesaid sources.

According to the ministry of finance, pace of disbursement is usually slow during the first two quarters of the fiscal year. The fiscal year 2018-19 saw a political transition and during that period there was initially suspension of development activities by the Election Commission of Pakistan and for quite many months project approving forums i.e. CDWP and ECNEC were not in place. Consequently various projects, both ongoing and in the pipeline, were adversely affected.

The $3 billion loan that Pakistan received from Saudi Arabia, $2 billion from United Arab Emirates (UAE) and $2.1 billion from China are not part of the aforesaid loan. The Saudi Arabian and UAE’s assistance has been shown on books of the State Bank of Pakistan (SBP). Pakistan’s foreign exchange reserves would increase to $17.7 billion after receiving $2.1 billion from China. The SBP’s held reserves would surge to $10.84 billion from existing $8.84 billion while reserves of commercial banks $6.9 billion. The government would also borrow $1 billion from International Islamic Trade Finance Corporation (ITFC) to ensure continued stability in the country’s balance of payment position. The government has worked to ensure $1 billion from the ITFC which will be utilised in this fiscal year.

The breakup of $2.94 billion showed that Pakistan had borrowed $976.42 million from multilateral sources, $1.5 billion from bilateral sources and $499.4 million from commercial banks in July-February of the current financial year. According to the latest data of Economic Affairs Division, the country had borrowed $499.4 million from commercial banks in July-January of the current financial year. The previous government had budgeted estimates of $2 billion from foreign commercial banks for 2018-19. The Asian Development Bank (ADB) disbursed $376.11 million in first eight months of the ongoing fiscal year against the budgeted estimates of $1.38 billion. Pakistan received $1.21 billion from China in the current fiscal year against the budgeted estimate of $840.99 million. USA disbursed $51.46 million, International Development Association (IDA) $142.83 million, UK $76.42 million, France $41.83 million, and Germany $14.15 million in the current fiscal year so far.

The Islamic Development Bank (IDB) had given loan of (S-Term) $388.82 million during eight months of the year 2018-19. The IDB had activated its three-year $4.5-billion oil financing facility for Pakistan in July last year. The International Islamic Trade Finance Corporation (ITFC), a member of the IDB Group would roll over a loan of $4.5 billion to Pakistan in next three year, $1.5 billion in each fiscal year.