Annual Report on Foreign Economic Assistance released
Ministry of Economic Affairs released Annual Report on Foreign Economic Assistance 2019-20 on Friday. The Government of Pakistan signed agreements worth $10.447 billion as new foreign loans while paying back $10.4 billion on account of external public debt including interest of $1.9bn, during the fiscal year 2019-20.
The loans taken by the government in FY2019-20, were almost 1.3 times higher than the previous year ‘s loans of $8.4 billion.
According to the report, out of the total new commitments of $10.447bn, the amount worth $3.463bn(33%) was the part of agreements signed with commercial banks while $6.79bn were contracted with multilateral development partners among whom, the Asian Development Bank contributed most with 30% of the total new commitments, followed by World Bank (22%), Islamic Development Bank (7%) and Asian Infrastructure Investment Bank (5%).
The government also received $193 million from Bilateral Development Partners (mainly foreign countries).
It was also written in the report that 69% of the new commitments during FY 2019-20 were made under the category of budgetary support and about 26% were allocated for project financing while the remaining 5% for the commodity financing.
Transport and Communication sector received the most share (40%) from the new commitments with Health emerged as second priority (19%), followed by Physical Planning and Housing (12%), Rural Development and Poverty Reduction (10%), Energy Power (9%) and Agriculture (6%).
“Although the 18th Constitutional Amendment devolved the subjects of health, education, agriculture, and rural development to the Provinces; however the sectoral distribution of FEA manifests the continuous support of the Federal Government to the provinces in vital sectors of the economy and society,” pointed out by the report.
During FY2019-20, the government paid $10.4bn on account of debt servicing of external public loans which included principal payment of $8.5 bn and $1.9bn in interest payments.
The report also emphasized that the new commitments were higher than budgeted in view of the Covid-19 pandemic.
The Foreign Economic Assistance (FEA) can be defined as “government aid designed to promote the economic development and welfare of developing countries”. It includes concessional loans, grants and technical assistance which is provided bilaterally or through multilateral agencies.