In July 2023, Pakistan’s external debt increased by $2.8 billion within the first month of the current fiscal year, owing to a $2 billion time deposit from Saudi Arabia and a $508 million grant for the “Dragon” multi-role fighter aircraft from China to the Pakistan Air Force. This surge in debt marks a significant contrast to the previous year when Pakistan’s debt burden had only increased by $185 million in the same month.
Pakistan had also received a $100 million facility from Saudi Arabia for oil supply. These various loans presented an opportunity for Islamabad to bolster the State Bank’s reserves. The IMF program imposes a cap on overall guarantees, with a stipulation for the government to keep the limit below $3 billion under the SBP program.
Additionally, Pakistan secured a $3 billion guarantee for the Chashma 5 project, but it was decided to gradually access this amount in order to remain within the prescribed limit of the IMF program. In July 2023, a substantial sum of dollars entered Pakistan to achieve the $17.3 billion target set for the entire fiscal year. This stands in stark contrast to the previous year when Pakistan received only $185 million in the same month due to the challenges faced in completing the sixth and seventh reviews of the IMF program.
Finally, after being reinstated in August 2022, the program faced delays and was ultimately completed unsuccessfully by June 30, 2023. Subsequently, a new program was initiated in Pakistan, which lasted for nine months. After this program’s completion, Pakistan’s dollar inflows were restored, particularly through a $2 billion time deposit from Saudi Arabia.
Consequently, the cumulative funds received from Saudi Arabia have reached $5 billion. According to the distribution details provided by the Economic Division, this sum will provide the Pakistan Development Fund (PDF) with $508.34 million. Pakistan has also obtained $193 million from other creditors, including $22.59 million from the Asian Development Bank, $82.71 million from the World Bank’s IDA loan, $3 million from the IFC landing, $6.38 million from IADI, and $67 million from the Islamic Development Bank for the Short-Term Trade Facility.