Despite difficulties with its external accounts, Pakistan borrowed $5.115 billion abroad in the first five months of the current fiscal year (July-November), over 14% more than it did in the same time frame the previous year.
The Ministry of Economic Affairs (MEA) reported receiving around $5.115 billion in foreign assistance in 5MFY23 compared to $4.499 billion at the same time last year in its monthly report on Foreign Economic Assistance (FEA). Pakistan got $842 million from foreign inflows in November alone, up from $794 million in the corresponding month the previous year, a 6 per cent increase.
As a result, the overall inflows, which were $5.115 billion in 5MFY23, represented just 22.4% of the $22.817 billion in budget expectations for the whole year. PDM govt borrowed from foreign lenders 14% more. The inflows of $4.5 billion in 5MFY22 accounted for 37 of the annual budget estimates of $12.233 billion. The MEA had finally reported the full fiscal year 2021-22 foreign economic assistance at $16.975 billion.
In the same five months of 2019-20, the external inflow was $3.108 billion around 24% of the annual budgeted amount of $12.958 billion. Last week, the MEA reported that Pakistan had received a total of $10.7 billion during 2019-20 and $8.4 billion in 2018-19.
The foreign inflows reported by MEA also include expensive foreign debt in Naya Pakistan Certificates from overseas Pakistanis and stood at just $139 million in five months against a full-year target of $1.63 billion. Unlike previous years, there were only three major sources of foreign inflows this year and including $4.172 billion from multilateral lenders, followed by $602 million from bilateral lenders and about $200 million from commercial banks.
The 4th usual source –- international bonds -– had dried up because of poor credit rating amid external account challenges and resultantly historically low foreign exchange reserves. The government had targeted $2 billion in international bonds for the fiscal year, but no funds could be raised in five months.
Of the multilateral, the Asian Development Bank turned out to be the biggest lender with $1.677 billion loan disbursements in 5MFY23, followed by $1.166 billion from the International Monetary Fund, whose subsequent disbursement ($1.17 billion) planned for the first week of November could not materialise because of differences with the authorities over the completion of 9th review.