Pakistan paid $2.4b on account of debt servicing of external public loans in Q1..

 Pakistan paid $2.4 billion on the account of debt servicing of external public loans during the first quarter (July to Septem­ber) of the current fiscal year.

The government paid USD 2,404 million during the first quarter of FY 2023-2024 on ac­count of debt servicing of exter­nal public loans. Of this, principal repayments were USD 1,627 mil­lion and interest payments were USD 777 million. Furthermore, the net transfers to the govern­ment’s external public debt resulted in a positive balance, amounting to USD 1,869 million, according to the official data of the Economic Affairs Division.

The breakup showed that Pak­istan paid back $99 million to foreign commercial banks, $40 million as bonds, $524 million to the International Monetary Fund (IMF), $283 million to the Asian Development Bank (ADB), $331 million to the World Bank, $210 million to China, $407 mil­lion to Saudi Arabia, $26 million to Japan, $108 million to IsDB (ST), $186 million to NPC and $190 million as others.

During the first quarter Jul-Sep 2023-24, net transfers to the government’s external pub­lic debt resulted in a positive balance, totaling USD 1,869 mil­lion, indicating an increase in the external public debt stock.

Disbursements of USD 3,536 million during 1st Quarter Jul-Sep 2023-2024 were mainly un­der the projects and programs loans/grants from multilateral, bilateral development part­ners and financial institutions. Amongst multilateral develop­ment partners, World Bank and IsDB were the largest develop­ment partners with disburse­ments of USD 306 million (62% of total multilateral disburse­ment) and USD 100 million (20% of total multilateral disburse­ment) respectively. On the bilat­eral side, China disbursed the largest amount, totaling USD 509 million. Saudi Arabia emerged as the second largest disbursement partner dispensing USD 300 mil­lion for the import of oil and pe­troleum products.

During the first quarter of FY 2023-24, USD 2,204 million (62 percent of the total disburse­ments i.e., USD 3,536 million) were obtained for balance of payment/ budgetary support comprising of SFD Time Depos­its of USD 2000 million and USD 204 million from Naya Pakistan Certificate (NPC). The total disbursements realized under project financing were record­ed as USD 875 million followed by program financing of USD 57 million and commodity financ­ing of USD 400 million.

Sectoral distribution of the disbursements under project financing (i.e., USD 875 million) represents the sectoral priori­ties of the government. Basically, it reflects the sectoral composi­tion of the active portfolio of the total project assistance in the country. During 1st Quarter Jul-Sep 2023-24, the share of dis­bursements under floods-2022 were USD 101 million, energy & power USD 64 million, wa­ter USD 52 million, transport & communication USD 34 million, health & nutrition USD 29 mil­lion, agriculture USD 25 million and physical planning & housing USD 22 million in the total proj­ect assistance.

As of 30th September 2023, the total external public debt of the government was USD 86,358 million. Around 64% of the total external public debt was ob­tained from multilateral and bilateral sources having conces­sional terms and longer matu­rity. The breakup of $86.358 bil­lion showed that Pakistan had borrowed $37.25 billion from multilateral development part­ners, $18.3 billion from bilateral development partners, $5.554 billion from foreign commer­cial banks, $7.8 billion as Euro­bonds, $7.8 billion from the IMF, $4 billion as China SAFE De­posits, $5 billion as Saudi Time Deposits and $589 million from other sources.

During the first quarter Jul-Sep 2023-24, the disbursed amount in the shape of pro­gram financing, project financ­ing, commodity financing, and budgetary support helped the Government to support wide-ranging economic reforms, exe­cute development activities and provide support to its balance of payments position. Ongoing col­laborations with development partners were also focused on mitigating the devastating ef­fects of Floods-2022. A signifi­cant share, i.e., 64% of the total external public debt, is secured on concessional terms with extended maturities. Hence, a prudent external debt manage­ment strategy is being followed to optimize the benefits of for­eign economic assistance and bolstering the overall economic resilience of the country.