Pakistan Secures $436 Million in Foreign Loans During July 2024

Pakistan Secures $436 Million in Foreign Loans During July 2024

In July 2024, Pakistan secured $436.39 million in foreign loans from various financing sources. This amount represents a sharp decline compared to the $2.890 billion borrowed in the same month of the previous fiscal year (FY24). The Economic Affairs Division (EAD) recently released data detailing the sources and amounts of these loans, offering insight into the country’s financial landscape as it enters the new fiscal year.

Budgeted Foreign Financing for FY25

For the fiscal year 2024-25 (FY25), the government of Pakistan has budgeted $19.393 billion in foreign financing, which includes $19.216 billion in loans and $176.29 million in grants. This ambitious target highlights the country’s reliance on external borrowing to meet its financial obligations and support its economic agenda.

However, the data reveals that certain key budgeted amounts have yet to be received. The government had estimated $9 billion in time deposits, including $5 billion from Saudi Arabia and $4 billion from China’s SAFE deposits. Yet, no funds were received under these heads in July 2024. Additionally, there is no recorded assistance from the UAE.

Breakdown of Foreign Loans in July 2024

In the first month of FY25, the country received $127.70 million through the “Naya Pakistan Certificate,” a significant source of foreign exchange inflows aimed at overseas Pakistanis. Additionally, $201.01 million was secured from multilateral sources, and $107.68 million from bilateral sources.

The non-project aid received amounted to $128.93 million, including $1.23 million for budgetary support, while project aid totaled $307.46 million. These funds are critical for the execution of various development projects and maintaining financial stability.

Disbursements from Key Financial Institutions

The Asian Development Bank (ADB) disbursed $54.05 million in July 2024, a fraction of the $1.651 billion budgeted for the entire fiscal year. Similarly, the International Development Association (IDA) provided $111.88 million against a budgeted $1.525 billion for FY25, while the International Bank for Reconstruction and Development (IBRD) disbursed $20.54 million against the planned $550.22 million.

Notably, some institutions like the Islamic Development Bank (IsDB) did not disburse any funds in July, despite the government budgeting $500 million for the fiscal year. The Asian Infrastructure Investment Bank (AIIB) and the International Fund for Agricultural Development (IFAD) also made modest disbursements of $8.54 million and $4.54 million, respectively.

Bilateral Disbursements: A Closer Look

China remains a significant bilateral lender, disbursing $96.76 million in July 2024, against the budgeted $134.18 million for FY25. Saudi Arabia, another key ally, disbursed a modest $2.69 million against the anticipated $146.54 million for the year. The United States contributed $4.42 million, in line with the budgeted $20.87 million for the fiscal year.