Pakistan's government missed its loan target for July, falling short of the expected amount.
Islamabad [Pakistan], August 28: The Shahbaz Sharif government struggled to meet its financial goals in July, securing only USD 436.4 million in foreign assistance and grants, a significant decrease of nearly 85 percent compared to the same period last year, according to Dawn News. This shortfall comes as Pakistan awaits approval for a USD 7 billion bailout from the IMF's executive board.
The USD 426 million in foreign loans and USD 10.5 million in grants received in the first month of the current fiscal year fall far short of the ambitious USD 19.4 billion foreign assistance target set for FY25.
In July of the previous year, Pakistan received over USD 2.89 billion, largely bolstered by the signing of a 9-month USD 3 billion Stand-By Arrangement (SBA) with the IMF, which facilitated a substantial USD 2 billion time deposit from Saudi Arabia. The total inflows in July 2023 amounted to USD 5.1 billion, including USD 1.2 billion from the IMF and an additional USD 1 billion from the UAE.
On Tuesday, the Ministry of Economic Affairs reported that Pakistan received USD 436.39 million in total foreign inflows for July 2024, compared to USD 2.89 billion in the same month last year. The Economic Affairs Division (EAD) noted that a significant portion—USD 307 million—came from project financing, representing a 52% decline from the USD 640 million received in July last year.
Pakistan aimed to secure USD 4.53 billion from multilateral lending agencies (excluding the IMF) for the full year, but only managed to obtain USD 201 million in July, slightly more than the USD 194 million received in July of the previous year, when the annual target was USD 5.34 billion.
In 2022-23, the government set a budget of USD 22.8 billion in foreign assistance but managed to secure only USD 10.8 billion—just 46 percent of the target—due to the suspension of the IMF program, resulting in an USD 11.8 billion shortfall and a subsequent depletion of foreign exchange reserves.