Latest news with #EconomicAffairsDivision
Business Recorder
2 days ago
- Business
- Business Recorder
Foreign debt inflows
EDITORIAL: Economic Affairs Division (EAD) released data that showed Pakistan's foreign debt inflows (fresh loans and grants) surged to 12.4 billion US dollars in fiscal year 2025 attributed to an inflow of 3.4 billion US dollars in June 2025 secured by the government from commercial banks in the United Arab Emirates (UAE) and China. The provisional disbursement July-June 2025 was cited as 4.297 billion US dollars, which was 518.83 million US dollars in excess of what was budgeted for the year at 3.779 billion US dollars. The amortisation period and the interest rate applicable on these foreign commercial loans were not shared with the public, rates that are set in line with the ratings given to Pakistan by the three international rating agencies. In this context, it is relevant to note that in spite of a recent upgrade by one of the three international rating agencies, a rating guided by the International Monetary Fund (IMF) which noted in the first review documents of the ongoing Extended Fund Facility dated May 2025 that external and internal risks would 'quickly eviscerate Pakistan's hard won economic stability' one may safely assume that the interest rate agreed would be higher than the market rate and, additionally, given that commercial banks typically lend for short periods the principal due may have to be factored in as repayment in the current year's reserves. In other words, the actual debt servicing for 2025-26 may already be lower than what was budgeted for the year. The budgeted amount under Naya Pakistan Certificate was 464.9 million US dollars, and it reached a high of 1,918 million US dollars July-June 2025 which accounted for market borrowing inflows, including commercial borrowings, of 5439.34 million US dollars, higher than the budgeted 5049.26 million US dollars — a rise in spite of one billion US dollars budgeted bonds not issued, due perhaps to lack of market interest. Time deposits cited in the statistics were 9 billion US dollars — budgeted though the corresponding disbursed column (provisional) has not been filled but the total bilateral and multilateral inflows of 5,439.34 million US dollars plus 4,297.83 million US dollars foreign commercial bank borrowings plus 1,918.06 million US dollars from Naya Pakistan Certificate gives a grand total of 11,655.23 million US dollars, which requires a clarification from EAD as to how it reached a total of 12,138.24 million US dollars as adding on the time deposit would give a grand total of 20,655 million US dollars — higher than the budgeted 19,393 million US dollars. The EAD does not factor in the IMF disbursements; however, two observations are critical. First and foremost, the capacity of the administration to secure commercial loans from abroad has no doubt been strengthened due to the country being on an IMF programme; however, budgetary support amounted to 8,602.96 million US dollars (provisional) last year and yet this was only 54 percent of the budgeted amount of 15,965.94 million US dollars. One would hope that the government had instead opted to slash its major current expenditure components, some of which required reforms like the pension budget while others required sacrifice (salary budget of the 7 percent employed by the government). And secondly, the shortfall was filled by a rise in domestic borrowing that was accommodated by the 10 percent decline in the discount rate that led to a decline in mark-up on domestic debt by about 830 billion rupees. To conclude, there is little evidence of the country moving towards ending the toxic tendency to borrow from abroad to meet the budgeted outlay as repeatedly stated by the Prime Minister and one can only hope that in the current year the budgeted current expenditure is slashed, which is not attributable to a lower discount rate but to actual savings by improving governance. Copyright Business Recorder, 2025
Business Recorder
7 days ago
- Business
- Business Recorder
KSA oil facility, rollover of time deposits keep things afloat
ISLAMABAD: The resumption of Saudi Oil facility and rollover of time deposits by China and Saudi Arabia kept the foreign economic assistance at comfortable level in 2024-25. According to the data released by Economic Affairs Division, the government received foreign economic assistance 37 percent less against the budget estimates in 2024-25. The budgetary estimate of foreign economic assistance disbursement for 2024-25 was $19.4 billion, whereas, the government received $12.14 billion which is $7.25 billion less against the estimated target. However, if budgeted time deposits of $9 billion including $5 billion Kingdom of Saudi Arabia (KSA) time deposit and $4 billion SAFE China deposit for the current fiscal year would be added the foreign financial assistance depicts a very rosy picture. The resumption of Saudi Oil Facility amounting to $100 million per month jacked up disbursement by Saudi Arabia to $221 million in FY25 against estimates of $76 million Among the multi-donors, China extended loan of $483.51 million which was as per the Government projection. Asian Development Bank provided financial assistance of $2.13 billion against the estimates of $1.65 billion. Among this amount $2.12 billion was disbursed as loan component whereas $6.46 million received in shape of grant. Among other prominent multilateral donors were International Development Association (IDA) of World Banks with $1.37 billion; whereas, Islamic Development Bank extended long-term loan of $186 million and short term loan of $552 million. The total bilateral foreign economic assistance remained $600 million against the estimates $471.2 million in FY25 mainly because of the Saudi Oil facility of $1.2 billion to Pakistan for 12 months. Saudi Arabia also rollover time deposits of $5 billion kept in State Bank to boost its reserves in December 2024, whereas, Chinese deposits of $5 billion was rolled over for another year in March 2025 for the same purpose. The country's current account balance recorded a surplus of over two billion dollars in the FY25 for the first time in 14 years, driven by a substantial increase in workers' remittances. Copyright Business Recorder, 2025
Express Tribune
11-07-2025
- Business
- Express Tribune
EU, Pakistan sign €20m grant to support SMEs
Listen to article The government of Pakistan and the European Union (EU) signed a €20 million grant agreement on Thursday for launching the "Better Governance and Business Environment" initiative, reaffirming their shared commitment to sustainable and inclusive economic development. The agreement was signed by EU Ambassador to Pakistan Dr Riina Kionka and Economic Affairs Division Secretary Dr Kazim Niaz. Funded under the EU's Multi-annual Indicative Programme 2021-2027, the initiative aims to enhance the competitiveness of Pakistan's private sector, particularly small and medium-sized enterprises (SMEs), including those led by or benefiting women. The programme will strengthen SME-related legislation, support the green transition of export-oriented firms, facilitate targeted green investments and promote public-private dialogue. It aligns with the EU's Global Gateway strategy, GSP+ commitments and the EU Green Deal, promoting smart, sustainable investment and resilient value chains. Speaking on the occasion, Kazim Niaz expressed appreciation for the EU's continued support and partnership. He emphasised the timely nature of the intervention, highlighting its strong alignment with Uraan Pakistan's goals for private sector development and institutional reforms to attract responsible investment. Ambassador Riina Kionka stated, "This agreement underscores the EU's commitment to supporting Pakistan in building a resilient, inclusive and competitive economy. We are investing in green innovation, women-led businesses and public-private partnerships to ensure a more sustainable future for all Pakistanis."
Business Recorder
10-07-2025
- Business
- Business Recorder
Pakistan signs €20mn grant deal with EU to boost governance, business environment
Pakistan and the European Union (EU) on Thursday signed a €20 million grant agreement to launch the 'Better Governance and Business Environment' initiative, aimed at strengthening governance and improving competitiveness of the private sector, particularly small and medium enterprises (SMEs). The agreement was signed by EU Ambassador Dr. Riina Kionka and Secretary Economic Affairs Division Dr. Kazim Niaz. The programme is part of the EU's Multiannual Indicative Programme 2021-2027. According to officials, the initiative will support SME-related legislation, promote the green transition of export-oriented businesses, and encourage targeted investments aligned with the EU's Global Gateway strategy, the GSP+ framework, and the EU Green Deal. Dr. Niaz thanked the EU for its continued support, terming the programme a timely intervention aligned with the government's 'Uraan Pakistan' strategy for institutional reforms and responsible private sector growth. Ambassador Kionka said the EU is committed to helping Pakistan build a more inclusive and sustainable economy by investing in green innovation, women-led enterprises, and public-private partnerships. The EU's development cooperation with Pakistan continues to focus on climate resilience, human rights, governance, and sustainable economic growth.
Business Recorder
27-06-2025
- Business
- Business Recorder
World Bank reaffirms commitment to $40bn CPF with Pakistan
Pakistan and the World Bank reaffirmed their development partnership during high-level consultations in Washington, D.C., with both sides committing to the effective implementation of the newly launched $40 billion Country Partnership Framework (CPF) 2026–2035. The development came during a meeting between Federal Minister for Economic Affairs Ahad Khan Cheema, during his official visit to the United States, with senior World Bank leadership, read a statement released by the Economic Affairs Division (EAD) on Friday. 'In a productive meeting with Anna Bjerde, Managing Director for operations, and Martin Raiser, South Asia Regional Vice President, Cheema applauded the strengthened collaboration between Pakistan and the World Bank Group over the past year. 'This enhanced engagement has culminated in the development of the new Country Partnership Framework (CPF) 2026-2035, a transformative ten-year strategy backed by an unprecedented $40 billion commitment from the World Bank,' read the statement. World Bank's Benhassine lauds Pakistan's economic turnaround Cheema, during the meeting, expressed deep appreciation for the World Bank's support, particularly during critical challenges, including the COVID-19 pandemic and devastating 2022 floods. 'As our largest development partner, the World Bank has played an indispensable role in Pakistan's socio-economic progress and improving the lives of our citizens,' stated Cheema. With the CPF now successfully launched, Cheema emphasized the government's complete focus on finalizing a comprehensive implementation framework in collaboration with the World Bank to ensure the strategy delivers its full potential. He welcomed Pakistan's transition to the World Bank's Middle East and North Africa (MENA) Region under Vice President Ousmane Dione, noting this move will create valuable opportunities for knowledge exchange and regional synergy. Meanwhile, in a separate meeting with Abdelhak Bedjaoui, World Bank Executive Director, Cheema acknowledged his effective representation of Pakistan's economic interests. The minister proposed regular visits by executive directors to constituency countries to better understand development needs and opportunities for World Bank engagement. 'The discussions also highlighted recent World Bank approvals, including the $700 million Reko Diq mining project and $400 million Risk Participation Facility, which moved forward despite objections,' read the EAD's statement. Cheema reaffirmed Pakistan's commitment to working closely with the World Bank country team to achieve the CPF's ambitious development objectives and transformational impacts.
