ISLAMABAD: During the first quarter of the current fiscal year (July-September), foreign assistance inflows to Pakistan experienced a dramatic reduction of 60%, totaling $2.3 billion, a decline from approximately $5.73 billion in the same period last year. This drop has been attributed to delays in securing a support package from the International Monetary Fund (IMF).
On Tuesday, the Economic Affairs Division (EAD) published its monthly report on Foreign Economic Assistance (FEA). The annual target for foreign assistance is projected at $19.4 billion, with the report indicating that $1.3 billion was secured in the first quarter.
This represents a notable decrease compared to the $3.527 billion received in the same period last year, when the target was set at $17.6 billion.
It is important to note that the State Bank of Pakistan has separate records for the roughly $1 billion that the IMF transferred on the last day of September, which is not included in the report.
Significant Decline in IMF Inflows for Pakistan Relative to Last Year
In early July of the previous fiscal year, the IMF disbursed $1.2 billion, leading to total inflows of $2.9 billion for that month. In contrast, this July, Pakistan received only $436 million. Additionally, the European Investment Bank (EAD) reported that September inflows reached $594 million, marking an increase from $321 million in the same month the prior year.
From the total $1.3 billion received in the first quarter, about $663 million was designated for budgetary support or program loans, while the remainder, totaling $645 million, was allocated for project financing. By comparison, during the same stretch last year, the EAD had received nearly $2.5 billion in program loans and around $875 million in project assistance.
Multilateral inflows amounted to $493 million, remaining fairly consistent year-over-year, but bilateral disbursements fell to $250 million, down from $325 million during the first quarter of this year.
The EAD also secured roughly $200 million in loans from international commercial lenders in the first quarter, suggesting a slight rebound in financing from commercial banks, who had been reluctant to lend to Pakistan last year.
Furthermore, Naya Pakistan Certificates generated $375 million for the country, significantly higher than the $204 million garnered the previous year.
World Bank Leads Third Party Disbursements with $277M in Q1 Support
Among multilateral institutions, the World Bank was the largest contributor with a $277 million disbursement in the first quarter this year, a decrease from the $300 million provided in the same period last year.
Following the World Bank, the Asian Development Bank (ADB) provided $114 million and the Islamic Development Bank contributed $62 million. Among bilateral lenders, China topped the list with $97 million, followed closely by France at $90 million and the United States at $36 million.
Image Source: Lex0077 / Shutterstock
