Pakistan received $16.974 billion foreign assistance in FY22: EAD

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  • Pakistan received $16.974 billion in foreign economic assistance from July 2021 to June 2022.
  • Pakistan signed new agreements worth $15.722 billion during the period.
  • Pakistan paid $12.378 billion during FY22 on account of debt servicing of external public loans.
  • Of which, principal repayments were $10.355 billion and interest payments were $2.023 billion.

Islamabad: The Economic Affairs Division (EAD) Wednesday revealed that Pakistan received $16.974 billion in foreign economic assistance from July 2021 to June 2022.

Foreign Economic Assistance (FEA) is the aid that promotes the economic development and welfare of developing countries, provided bilaterally or through multilateral agencies. The main purpose of the FEA is to provide relief and assistance to developing economies in minimizing fiscal imbalances and promoting growth and development.

Disbursements made to Pakistan

According to the yearly report published by the EAD, during FY22, disbursements of $16.974 billion were made to Pakistan mainly under the project and program loans/grants, with the ADB, World Bank, and Islamic Development Bank being the largest contributors among multilateral development partners.

The report stated that China was the largest bilateral contributor to total disbursements in the period under review. The energy and power sector received the largest share of disbursements, i.e. 26% of the total.

The composition of disbursements includes a) $4.873 billion or 29% from foreign commercial banks; b) $4.828 billion or 28% from the multilateral development partners, mainly ADB, World Bank, and IsDB; c) $3 billion or 18% under SFD Time deposits; d) $2.231 billion or 13% from bilateral development partners particularly China and Saudi Arabia; e) $2 billion or 12% from international bondholders.

New commitments agreed by Pakistan

In terms of new commitments, the report mentioned that the Government of Pakistan signed new agreements worth $15.722 billion in FY22. These commitments were composed of Eurobonds, Time deposits from Saudi Arabia, and multilateral and bilateral development partners.

Out of these commitments, 62% was committed by international financial investors under bonds, commercial banks, and time deposits to provide support to the budget, strengthen the foreign exchange reserves and stabilize the exchange rate, 16% as project financing, 14% as commodity financing, and 8% as program financing.

Pakistan’s total external debt

The EAD noted that borrowing can be productive for the economic growth of developing countries as long as the economic returns are higher than the cost of borrowed funds. While external debt is useful for the growth of the economy, dependence on external debt must be closely monitored and managed.

“As of 30th June 2022, Pakistan’s total external public debt amounted to $88.84 billion,” the report stated, adding that Pakistan paid $12.378 billion during FY22 on account of debt servicing of external public loans.

The EAD noted that principal repayments were $10.355 billion and interest payments were $2.023 billion.

Pakistan’s Current Account Deficit crosses $17B mark during FY22