Pakistan secures $1.31 billion in foreign assistance in FY25's first quarter
The country obtained $374.79 million through foreign commercial borrowing
Pakistan secured $1.31 billion in foreign assistance in the first quarter of fiscal year 2024-25 (FY25), according to the latest monthly report from the Economic Affairs Division (EAD).
No global bonds were issued during this period. The government has set a target to receive $19.39 billion in foreign assistance for the full fiscal year.
This year's first-quarter foreign assistance is significantly lower compared to $3.53 billion secured in the same quarter last year. Last year, the government had budgeted $17.62 billion but only managed to obtain $9.81 billion throughout the fiscal year.
The $19.39 billion target for the current fiscal year includes $5.05 billion from multilateral and bilateral lenders, $1 billion from international bonds, $3.78 billion in foreign commercial loans, a $5 billion time deposit from Saudi Arabia, and a $4 billion safe deposit from China.
Disbursement from bilateral and multilateral development partners totaled $278.16 million in September and $733.25 million during the first quarter of FY25. Multilateral sources contributed $482.96 million, while bilateral development partners provided $250.29 million during the same period.
Foreign commercial borrowing amounted to $115.75 million in September and $374.79 million for the first quarter of FY25.
This borrowing was secured through foreign commercial banks and the Naya Pakistan Certificates. The government managed to obtain $200 million from foreign commercial banks in the first three months, against the budget estimate of $3.78 billion for the full year.
Additionally, the government received a $388.82 million loan in September for non-project aid, in the form of program/budgetary support to restructure Pakistan's economy. Cumulatively, loans for non-project aid totaled $662.67 million during the first quarter of FY25.
This funding is crucial for Pakistan as it aims to meet its financial needs and support various economic initiatives throughout the fiscal year.
Pakistan's domestic and foreign debt has surged to PKR 71 trillion.
Analysts say that country’s heavy reliance on debt, especially from the IMF and friendly countries like China, Saudi Arabia, and the UAE, raises concerns about whether these funds are beneficial or risky.
Over the years, Pakistan has increasingly turned to foreign loans to cover fiscal deficits, providing short-term relief but creating long-term issues. Unlike domestic debt, foreign debt in foreign currency adds a burden since repayments must be made in dollars.
In 2023, debt servicing took up 74.8% of Pakistan's GDP, draining foreign exchange reserves. This high debt repayment limits the government's ability to provide social services or infrastructure development.
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