Pakistan’s ability to generate dollar inflows in the shape of loans and grants has diminished as the government could obtain only $505 million in loans/grants in May 2022 against $699 million in the same month of the last financial year.

Islamabad’s inability of striking a staff-level agreement with the IMF has literally choked its external dollar loans and grants, so dollar loans and grants decreased by around $200 million alone in May 2022.

In totality, Pakistan has received dollar inflows in the shape of loans and grants to the tune of $13.5 billion in the first 11 months (July-May) of the current fiscal year whereas the government could not muster up a single penny through commercial borrowing in May 2022.

According to official data released by the Economic Affairs Division (EAD) on Tuesday, the country had received foreign loans and grants of $13.5 billion in the first 11 months against official estimates of $14.008 billion for the whole financial year 2021-22 ending on June 30, 2022. The country had obtained $12.3 billion dollar inflows in the shape of loans and grants in the same period of the last fiscal year 2020-21.

Now the government will have to generate another $500 million in June 2022 for meeting the budgetary target of $14.008 billion envisaged for the outgoing fiscal year. The official data shows that the country obtained $505.6 million in May 2022 whereby the largest chunk of $194 million was raised through guaranteed loans. Multilateral creditors provided loans of $204 million and bilateral creditors $107.23 million.

As the IMF programme stalled, disbursement of loans from multilateral and bilateral creditors slowed down and Islamabad had no other option but to seek loans from commercial banks.