During the first 10 months (July-April) of the current fiscal year, Pakistan received approximately $11.3 billion in foreign loans and grants, falling significantly short of the annual target of $17.4 billion. This shortfall occurred despite the country meeting the revised target.
Official data released by the Ministry of Economic Affairs indicates that in April, foreign loans amounted to about $237 million, compared to $204 million in March and $318 million in February.
The government managed to secure around $7.142 billion in foreign economic assistance (FEA) during the first 10 months of the fiscal year, representing almost 41 percent of the annual budget target. This achievement was made despite limited avenues for borrowing, attributed to Pakistan’s poor credit ratings and challenging global financial conditions, notwithstanding support from the International Monetary Fund (IMF).
This FEA excludes the $3 billion disbursed by the IMF under the Stand-By Arrangement (SBA) and $1 billion from the United Arab Emirates (UAE), which are separately accounted for by the State Bank of Pakistan (SBP).
Including the IMF and UAE funds, total foreign inflows amounted to $11.24 billion over the 10 months, representing approximately 65 percent of the full-year targeted inflows.
Authorities attribute better debt and trade management to a reduced foreign assistance requirement for the current year, tentatively revised to around $11 billion instead of the initially set $17.62 billion in the 2023-24 budget for FEA.
The government now anticipates the current account deficit to be around $2 billion, down from the budget estimate of $6 billion.
In April’s monthly FEA report, the Ministry of Economic Affairs revealed that the country received $7.142 billion during July-April FY24, slightly lower than the $8.124 billion received during the same period last fiscal year. This decrease was attributed to adverse international conditions and Pakistan’s credit rating, deterring foreign investment.
Due to these challenges, Pakistan postponed plans to issue a $1.5 billion Eurobond. The government had also earmarked an additional $4.5 billion in foreign commercial loans for the current fiscal year.
The Ministry of Economic Affairs reported total inflows of Rs237 million in April, compared to Rs204 million in March, $333 million each in January and February, and $1.62 billion in December. Notably, December 2023 saw significant disbursements from major multilateral institutions, including the World Bank, Asian Development Bank, and Asian Infrastructure Investment Bank.
During the first 10 months, major FEA inflows included $2.89 billion in July 2023, following an agreement with the IMF for a fresh short-term program, and $1.34 billion in April when the IMF released its final $1.1 billion tranche.
Overall, foreign loans of $7.01 billion and grants of $132 million were disbursed in the first 10 months, primarily for budgetary support or program loans, amounting to $4.84 billion, and project aid, totaling approximately $2.3 billion.
