Economic Affairs Division has clarified that the number for external public debt (i.e. $10.814 billion) quoted in the story is factually incorrect and misleading. The net addition to the external public debt during the outgoing fiscal year was $2.29 billion and not $10.814 billion. Total external inflows during FY 2018-19 were $10.186 billion including grants of $330 million.
The external loans obtained by the government during the year were $9.85 billion while the government made payment of $8.94 billion on account of retirement of external debt and debt servicing. Therefore, the net addition to the external public debt was only $2.29 billion which is the lowest of last three years.
Net additions to the external public debt during the last three fiscal years (i.e. FY 2015-16 to FY 2017-18) were $6.82 billion, $4.77 billion and $8.64 billion respectively. The disbursement comparison of ADB and World Bank made in the story is also incorrect. The factual position is that ADB and World Bank disbursed $ 541.17 million and $ 652.75 million respectively during FY 2018-19 as compared to $ 945.69 million and $ 817.54 million during FY 2017-18.
A slowdown in disbursement from development partners during the outgoing fiscal year was mainly due to a period of political transition in the country. During the interim government there was a complete ban by Election Commission of Pakistan on new development projects and relevant competent forums i.e. ECNEC and CDWP were not in place for quite some time. After formation of the elected government, the Provincial Governments’ Annual Development Plans were approved at a very delayed stage.
Consequently, approval of new lending operations and project related disbursement were slow during the initial months and started to pick-up during the second half of the year. It is important to note that budgetary support was also not available due to weak macroeconomic position inherited by the present government. Going forward, the government is working on a strategy whereby procurement of long term concessional financing from multilateral and bilateral sources is a priority.
With the restoration of confidence of international financial institutions and good prospects of budgetary support, the government is expecting very strong inflows from its development partners this year. Acquiring commercial financing is not a priority; the government resorts to commercial borrowing only as contingency measure to strengthen foreign exchange reserves and to maintain stability in the market. These commercial finances are acquired after full due diligence, at the best possible rates and have the approval of competent forum which in this case is the Federal Cabinet.