ISLAMABAD: Pakistan has serviced total external debt of $7.4 billion in the last fiscal year 2020-21 ending June 30, 2021.
The 2020-21 Yearbook, released on Monday, says the Economic Affairs Division (EAD) is responsible for ensuring timely debt service (principal and interest payments) of foreign loans.
Actual debt service from foreign loans in fiscal year 2020-21 was $7.397 billion, comprising $7.267 billion in central loans and $130 million in secured loans.
Central loans accounted for 98.24% of total external loan debt service. Of the total debt service of $7.397 billion, $5.912 billion was for principal repayments and $1.485 billion for interest payments. About 4.46% ($330 million) of total debt service went to bilateral creditors and 95.54% ($7.067 billion) to multilateral creditors. About 89.20% ($6.599 billion) were against medium and long-term loans while 10.79% ($798 million) were against short-term loans.
In the wake of the Covid-19 pandemic, the G-20 had announced the Debt Service Suspension Initiative (DSSI) which allowed developing countries to seek debt relief by rescheduling their principal and interest owed to its bilateral creditors between the period May 2020 and December 2021. The Government of Pakistan had applied for debt rescheduling under the G-20 DSSI to receive a total suspension of $3.785 billion (estimated) during this period. It is mainly thanks to this initiative that the debt service to bilateral creditors represented only 4.46% of the total debt service carried out during the financial year 2020.
Of the total planned debt rescheduling of $3.785 billion, a total of $2.331 billion was rescheduled in fiscal year 2020-21, for which 54 agreements with a total of 21 bilateral creditors had been signed and the remaining agreements were under negotiation.
The report states that loans contracted by the government of Pakistan from foreign creditors are channeled by the Ministry of Economic Affairs to provincial governments, federal government departments, 45 self-governing agencies and development financial institutions, in accordance with the policy of ready, which should be revised from time to time.
In fiscal year 2020-21, the policy was revised to reduce any interest and foreign exchange risk costs levied by the federal government, to the effect that loans will now be transferred on the same terms as those borrowed by the government of Pakistan. and the hedging of the exchange risk passed on to the borrower.
EAD again lent loans to provincial governments, including AJ&K and Gilgit-Baltistan, Federal Ministries, Autonomous Bodies and Development Finance Institutions (DFIs) in accordance with the Lending Policy. In the financial year 2020-2021, a recovery of re-leased foreign loans amounting to 128.337 billion rupees, comprising 90.393 billion rupees in principal and 37.944 billion rupees in interest (including foreign exchange risk charges) has been carried out.
Apart from the above, an amount of Rs 857.388 million had also been recovered in 2020-2021 regarding the previous period. The total recovery during the reporting period therefore amounts to Rs 129.194 billion.
Guarantee Fee The GOP (EAD) charges a guarantee fee of 0.5% per annum on the disbursed and outstanding loan amount of the borrowing agencies on their direct loans guaranteed by the GOP (Finance Division). Faee collateral amounting to Rs. 19.331 million had been recovered during the 2020-21 financial year.