Federal Government's Borrowing Drops by 37% in Fiscal Year 2022-23

Pakistan’s federal government’s borrowing strategy has seen a significant shift in the fiscal year 2022-23 (FY23). A sharp decrease in borrowing from multiple financing sources reflects the government’s changing economic policies. The government borrowed $10.844 billion in FY23 compared to $16.974 billion during the same period of 2021-22 (FY22), representing a substantial decline of around 37%.

In the projected financial blueprint for FY23, the government had earmarked foreign assistance of $22.817 billion, including $7.5 billion from foreign commercial banks. However, it’s important to note that the actual borrowing of $10.844 billion does not include the rollover of friendly countries’ deposits amounting to $6 billion ($3 billion each from China and Saudi Arabia) and the re-financing of a Chinese loan of $1.3 billion.

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According to the Economic Affairs Division, the country borrowed $2.206 billion from foreign commercial banks during FY23, which included $1.306 billion procured in June 2023. This figure falls significantly short of the budgeted $7.472 billion under the head of borrowing from foreign commercial banks, registering a shortfall of $5.266 billion during the period under review.

Additionally, the country received $1.166 billion from the International Monetary Fund (IMF) during FY23, breaking with past practices of not including IMF loans in such data. If we exclude the IMF loan, the country received $9.678 billion during FY23 compared to $16.974 billion during the same period of FY22, indicating a significant slowdown in inflows.

During FY23, several multilateral and bilateral partners aided Pakistan, with varying amounts. This included $2.266 billion from the Asian Development Bank (ADB), $1.458 billion from bilateral sources, and $1.166 billion from IMF. Additionally, $1.182 billion was disbursed by Saudi Arabia, and $31.13 million was provided by the United States, amongst others.

This financial data underscores the evolving scenario of Pakistan’s federal borrowing and foreign assistance, underlining the challenges and successes of its economic management policies in FY23.