ISLAMABAD: In the initial quarter of the ongoing fiscal year (July-September), foreign aid entries to Pakistan saw a substantial decrease of 60%, amounting to $2.3 billion, a drop from around $5.73 billion during the same timeframe last year. This reduction has been linked to setbacks in obtaining a financial support package from the International Monetary Fund (IMF).
On Tuesday, the Economic Affairs Division (EAD) released its monthly update on Foreign Economic Assistance (FEA). The annual goal for foreign aid is estimated at $19.4 billion, with the report showing that $1.3 billion was attained in the first quarter.
This signifies a substantial decline compared to the $3.527 billion acquired in the same quarter last year, when the objective was set at $17.6 billion.
It is vital to point out that the State Bank of Pakistan maintains separate records for the approximately $1 billion that the IMF disbursed on the final day of September, which is excluded from the report.
Marked Reduction in IMF Contributions for Pakistan Compared to Last Year
In early July of the preceding fiscal year, the IMF allocated $1.2 billion, resulting in total inflows of $2.9 billion for that month. Conversely, this July, Pakistan garnered only $436 million. Moreover, the European Investment Bank (EAD) indicated that September inflows reached $594 million, showing an uptick from $321 million in the same month the previous year.
Out of the total $1.3 billion obtained in the first quarter, approximately $663 million was earmarked for budgetary support or program loans, while the remaining $645 million was set aside for project financing. In contrast, during the same period last year, the EAD had acquired nearly $2.5 billion in program loans and about $875 million in project assistance.
Multilateral inflows totaled $493 million, remaining relatively stable year-on-year, but bilateral allocations decreased to $250 million, down from $325 million in the first quarter of the previous year.
The EAD also secured roughly $200 million in loans from global commercial lenders in the first quarter, indicating a minor recovery in financing from commercial banks, who had been hesitant to lend to Pakistan last year.
Additionally, Naya Pakistan Certificates generated $375 million for the nation, significantly surpassing the $204 million acquired the prior year.
World Bank Dominates Third Party Disbursements with $277M in Q1 Assistance
Among multilateral entities, the World Bank was the primary contributor with a $277 million disbursement in the first quarter this year, a reduction from the $300 million provided in the same quarter last year.
Following the World Bank, the Asian Development Bank (ADB) contributed $114 million and the Islamic Development Bank offered $62 million. Among bilateral lenders, China led the list with $97 million, closely followed by France at $90 million and the United States at $36 million.
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