Jul-Nov FY25: Foreign Borrowing Declines Year-on-Year, Including $1.03 Billion from IMF
FEATUREDNEWS
Jul-Nov FY25: Foreign Borrowing Declines Year-on-Year, Including $1.03 Billion from IMF
ISLAMABAD: Pakistan's foreign borrowing in the first five months of the fiscal year 2024-25 (July-November) declined significantly, amounting to $2.667 billion compared to $4.285 billion during the same period in the previous fiscal year. This information comes from data released by the Economic Affairs Division (EAD).
Notably, the $2.667 billion does not include the first tranche of $1.03 billion received from the International Monetary Fund (IMF). Including this tranche, total foreign inflows during the period rise to $3.697 billion.
The EAD data highlights that the government had budgeted $9 billion in time deposits for the current fiscal year, including $5 billion from the Kingdom of Saudi Arabia (KSA) and $4 billion from SAFE China. However, no funds were received under these heads in the first five months. Similarly, no financial assistance from the UAE has been recorded.
Borrowing from Multiple Sources
In July through October, the government borrowed $1.723 billion from various sources. By November, an additional $944.20 million was secured, with a significant portion—$594.78 million—disbursed by the Asian Development Bank (ADB).
The Saudi government recently extended a $3 billion deposit placed with Pakistan for another year in early December 2024, but this extension is not reflected in the EAD’s data for July-November.
For FY2024-25, Pakistan's government had budgeted $19.393 billion from multiple financing sources, comprising $19.216 billion in loans and $176.29 million in grants. These projections exclude any amounts from the IMF.
Commercial Banks and Bonds
The government had planned to borrow $3.779 billion from foreign commercial banks during FY2024-25. As of September, $200 million had been received, though the specific lender was not disclosed. No commercial bank borrowing was recorded in November.
Similarly, the government budgeted $1 billion from the issuance of bonds but did not issue any bonds during the first five months of the fiscal year, resulting in no funds under this category.
Naya Pakistan Certificate and Other Sources
During July-November FY25, Pakistan received $734.90 million through the “Naya Pakistan Certificate,” with $192.75 million raised in November alone.
The total disbursement from multilateral sources stood at $1.464 billion, while bilateral disbursements amounted to $268.80 million. Non-project aid totaled $1.597 billion, including $743.47 million for budgetary support, while project aid amounted to $1.070 billion.
Disbursements by Multilateral Institutions
Asian Development Bank (ADB): $767.83 million received against a budgeted $1.651 billion for FY2024-25.
International Development Association (IDA): $304.78 million disbursed, compared to a budgeted $1.525 billion.
International Bank for Reconstruction and Development (IBRD): $110.28 million received against a budgeted $550.22 million.
Islamic Development Bank (IsDB - Short Term): $119.25 million disbursed out of the budgeted $550.22 million.
Asian Infrastructure Investment Bank (AIIB): $34.25 million received.
International Fund for Agricultural Development (IFAD): $26.12 million disbursed, compared to a budgeted $40.45 million.
Bilateral Disbursements
China: $98.21 million disbursed, compared to a budgeted $134.18 million for FY2024-25.
Saudi Arabia: $8.67 million received, significantly below the budgeted $76.02 million.
United States: $38.25 million disbursed, exceeding the budgeted $20.88 million.
Observations
The decline in foreign borrowing highlights the country’s cautious approach to securing external financing amid fiscal constraints. While significant funds were received from multilateral institutions, anticipated inflows from key allies like Saudi Arabia, China, and the UAE remained below expectations.
This reduction in borrowing could signal efforts to manage the country’s external debt burden more effectively. However, the shortfall in funding from critical sources, coupled with the absence of commercial bank loans and bond issuance, underscores the challenges faced in meeting budgetary targets for FY2024-25.