The Senate Standing Committee on Economic Affairs was informed that Pakistan had taken a loan from the International Monetary Fund (IMF) in 2023 under a Standby Arrangement (SBA) at a high interest rate of 5.09%.

Officials from the Ministry of Finance and the State Bank of Pakistan (SBP) provided details of the IMF funds received by Pakistan from the first IMF program until June 2024, during a meeting of the Senate Standing Committee on Economic Affairs.

The committee chairman, Senator Saifullah Abro, questioned why Rs90 billion was spent on political schemes after taking the IMF loan.

The Senate Standing Committee on Economic Affairs sought details on utilizing the loan borrowed from the IMF.

The meeting was informed that the IMF has disbursed 2,126 million Special Drawing Rights (SDRs) to Pakistan, and the country will have to repay over $6.36 billion in SDRs over the next three to five years. Since 1984, Pakistan has paid the IMF $2,439 million as interest.

The committee was told that the country has had to approach the IMF repeatedly due to balance of payments problems.

The committee was also given a detailed briefing on the ongoing and completed projects of the Power and Water Resources Division, including proposals, tendering processes, and the latest progress, as well as the interest paid by the federal government and other related matters.

Additionally, the committee was provided with details of the IMF funds from the first program until June 2024, including the year-wise amounts received, repaid, and the interest paid by the government.

The committee was provided details of the various internal and external loans received by Pakistan, including loans from banks, the private sector, and intercompany loans, as well as details of the total liabilities.

Pakistan has entered into 24 full programs and 4 one-time facilities with the IMF since 1958, with the most recent being the 2023 Standby Arrangement (SBA).

Pakistan has drawn a total of SDR 21,260.08 million from the IMF since 1958, with an outstanding principal amount of SDR 6,369.16 million as of June 30, 2024.

The interest payments on the IMF programs from 1984 until June 30, 2024 amounted to SDR 2,439 million.

The committee was also provided details of the interest payments on Eurobonds and Sukuk issued by the government, including principal and interest payments from 2005 to 2010.

The additional interest payment details are as follows:

• In 2011, the interest paid was $503 million.
• In 2012, the interest paid was $368 million.
• In 2013, the interest paid was $357 million.
• In 2014, the interest paid was $333 million.
• In 2015, the interest paid was $188 million.
• In 2016, the principal paid was $500 million and the interest paid was $111 million.
• In 2017, the principal paid was $750 million and the interest paid was $111 million.
• In 2018, the interest paid was $111 million.
• In 2019, the principal paid was $2,000 million and the interest paid was $121 million.
• In 2020, the interest paid was $155 million.
• In 2021, the principal paid was $1,000 million and the interest paid was $185 million.
• In 2022, the principal paid was $1,000 million and the interest paid was $172 million.
• In 2023, the interest paid was $109 million.
• In June 2024, the principal paid was $1,000 million and the interest paid was $55 million.

The committee was also provided with the year-wise details of Pakistan’s domestic debt and Eurobonds as in June 2024, the outstanding Eurobonds owed by Pakistan is $6,800 million.

Regarding the loans from the IMF, the committee was informed that so far, Pakistan has borrowed 21,260 million Special Drawing Rights (SDRs) from the IMF. The outstanding repayable amount is 6,369 million SDRs.

The total interest paid on the IMF loans so far is 2,439 million SDRs.

Pakistan has undertaken a total of 28 programs with the IMF, out of which 24 were full-time programs and 4 were one-time programs.

The committee was further informed that the entire loan for the 2008 and 2010 IMF programs has been repaid, and the interest rate on these programs was 1.58%.

The meeting discussed a 5.09% rate on a standby arrangement from 2023 as between 2008 and 2023, Pakistan had six programs with the IMF.

Agha questioned why Pakistan needed to go to the IMF in 1958 when it had previously lent a loan to Germany in that year.

The standing committee was informed about ongoing multilateral and bilateral development projects that multilateral projects worth $5,908 million across sectors like water and power, with $2,012 million spent, 26 bilateral development projects worth $1,788 million, with $743 million spent as of June 2024 and involved partners like Japan, Kuwait, Germany, France, USAID and Saudi Arabia.

Read more

Pakistan’s public debt surges to Rs39.7tr, NA informed

IMF demands Pakistan cut down expenses

Mission economy: Pakistan seeks $11b aid from China and Saudi Arabia

The ongoing projects included 5th expansion project of Tarbela Dam hydropower started in 2017 and is expected to be completed in September 2027. It will generate 1,410 MW of electricity, 33% of the electro-mechanical works have been completed and the work on the tunnel will be completed in 2027.

The committee was briefed on the Dasu Hydropower project, a Stage 1 endeavor that will generate 2,160 MW of electricity at a total cost of $588 million. Originally slated for completion in 2024, the project is now expected to be finished in 2028 due to delays. Progress on associated works includes 40% on the KKH redesign, 70% on the colony, and 96% on the 132 kV transmission line. However, issues with the power house, new KKH sites, land acquisition, and security have caused setbacks, and the project is anticipated to incur financial losses from the delays.

Separately, the committee was informed about the Dasu transmission line project, a 765 kV line approved in October 2020 for $700 million. The first lot of this project, worth $330 million, commenced on February 10, 2023. Lot 1 comprises 604 towers, while Lot 2 has 280 towers costing $186.4 million. Concerningly, the foundation work for the 604 towers in Lot 1 has not yet been completed.

The standing committee expressed further concern over the progress of the Dasu transmission line project. They noted that Lot 3 of the project, worth $135.9 million, has only seen 17.5% progress so far. The committee chairman questioned how this portion could be completed on time, emphasizing that work should commence as soon as the prior construction phases are finished.

The committee members reiterated their concern over the non-participation of the Federal Minister for Economic Affairs in the standing committee meeting. They stated that the presence of relevant ministers makes it easier to discuss and decide on many issues. The committee chairman said that if proper working papers were provided, the committee members could examine the matters in greater detail and formulate effective recommendations.