Pakistan secured $1b loan from China in May: report

• Pakistan obtained $1b guaranteed loan from bilateral partner in May.
• China helped shore up external inflows up to $12.134 billion in the first 11 months (July-May) period of the current fiscal year 2020-21.
• The government had expected to fetch total foreign inflows to the tune of $12.233 billion, mainly in the form of loans during the whole fiscal year.

ISLAMABAD: A $1 billion loan was secured by Pakistan in May and it was most likely from China, The News reported on Friday.

China helped shore up external inflows up to $12.134 billion in the first 11 months (July-May) period of the current fiscal year 2020-21. 

The government had expected to fetch total foreign inflows to the tune of $12.233 billion, mainly in the form of loans during the whole fiscal year.

According to the publication's report, it seemed that Islamabad may surpass its expected target to get increased foreign funding than it had budgeted on the eve of the last budget.

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The total provisional disbursements of external loans went up to $12.13 billion during July-May period of the current fiscal year against $10.6 billion obtained in the whole last fiscal year 2019-20, senior official sources told The News.

The total external inflows in the form of multilateral loans, bilateral loans and issuance of international bonds had fetched $10.195 billion in the first 10 months (July-April) of the current fiscal year. 

But external inflows jumped up by around $2 billion in May, 2021 out of which around $1 billion was obtained as a guaranteed loan from a "bilateral partner", the source said. 

It is likely that this bilateral partner is China as it provided a guaranteed loan to help Islamabad construct its much-desired infrastructure.

Top government functionaries said "some disbursements were included into inflows as the payments were made through guaranteed loans, so it was made part of official inflows in subsequent periods".

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Out of a total provisional disbursed amount of $12.134 billion, Pakistan received $3.37 billion loans from multilateral creditors such as the World Bank, Asian Development Bank, Islamic Development Bank, Asian Infrastructure Investment Bank and others so far in the current fiscal year.

The provisional bilateral disbursement has gone up to $1.531 billion in the first 11 months of the current fiscal year. The disbursement from bilateral creditors stood at $367.5 million during the first 10 months (July-April) period of the current fiscal year, but it witnessed a sudden surge in May, 2021 and climbed up to $1.531 billion in July-May period of 2020-21. 

Sources said it was one guaranteed loan amounting to $1 billion.

"Commercial banks provided external loans of $3.732 billion in the July-May period of the current fiscal year. The government had obtained commercial foreign loans of $3.246 billion in the first 10 months (July-April) period of the current fiscal year. It shows the government obtained $476 million in May 2021. The government also raised $2.5 billion through issuance of Eurobond during the current fiscal year," the publication reported.

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During the entire last fiscal year 2019-20, the government had received $10.662 billion total external inflows from multiple financing sources which were 82% of the annual budget estimates of $12.958 billion for the entire fiscal year.

In fiscal year 2018-19, the external inflows stood at $10.595 billion, which were around (109pc) of the annual budgeted amount of $9.692 billion.