ISLAMABAD: The total budget estimate for foreign economic assistance is $14,088 million for the year 2021-22.
According to WealthPK’s report on Monday, this figure includes $3,722.4 million in grant disbursement and the rest – $10,366.2 million – in loans.
Director to Minister at EAD Saeed Chaudhry told WealthPK that the provisional disbursement for the months of July to November stands at $4,699.02 million. This leaves the remaining amount of $9,389 million to be disbursed in the last seven months of the fiscal year 2021-22.
The total economic assistance of $14,088 million can be broken down to multilateral donors accounting for the highest share at 38%, followed by commercial bank loans substantiating to 34% of the total budget estimate, bonds at 24%, and bilateral grants and loans at 2.2%.
The major bilateral donor is China. The major bilateral donor is China and the multilateral one is Asian Development Bank. Dubai Bank accounts for the highest share of disbursement in commercial loans from July to November.
The disbursement for July to November should have been around $5,870 million – at an even pace of $14,088/12 months. However, the EAD is lagging a bit on this front. Chaudhry further mentioned that project-based loans are tied to the key performance indicators of the progress, which is why there, sometimes, is a delay in the disbursement of project loans.
The EAD is expecting to fulfill the budget estimate of foreign economic assistance for the fiscal year 2021-22 through the remaining months.
External public debt:
The total inflow of the budget estimate for the fiscal year 2021-22 stands at a record high of $17,189 million; however, Chaudhry pointed out an important observation while talking to WealthPK that while the inflows of the country have grown, the outflows have also grown almost proportionally. This leaves the net balance and the debt stock to be near-constant, if not decreasing.
It can be observed that the debt stock grows at a steady pace since the fiscal year 2015-16 – which, according to the director to minister at EAD, is due to the snowballing effect of debt.
As Pakistan suffers from a fiscal deficit, the country has to take debt to finance its expenditures, and then take additional debt for the previous debt’s servicing. This snowballing effect is responsible for the steady rise of the debt stock but it is not indicative of the performance of the country.
The macro performance of the country can be better observed from the net inflows into the country. As illustrated, the net inflows in the country had been rising since 2018-19 as the government was trying to get hold of the economy but the situation was worsened by the global pandemic.
The net inflows declined from $6,232 in 2020-21 to $4,911 in 2021-22 (as estimated). The EAD expects the downtrend of the net inflows to be reinforced in the upcoming years. -INP
