Pakistan largest recipient of loan from China, IMF: World Bank report
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The World Bank's International Debt Report put Pakistan’s total external debt at $130.85bn in 2023
ISLAMABAD (Dunya News) – A World Bank report mentioned that Pakistan is the largest recipient of loan from China and International Monetary Fund (IMF).
According to the World Bank’s International Debt Report released on Tuesday, China is the largest creditor of Pakistan, with $29 billion loan, and listed Islamabad among top three receiver from the IMF.
The report mentioned Pakistan’s high debt-to-export and debt-to-revenue ratios “which is an indication of a weak fiscal position.”
The World Bank report put Pakistan’s total external debt at $130.85bn in 2023, which is 352 percent of its total exports and 39 percent of gross national income (GNI). The external debt servicing amounted to 43 percent of exports and 5 percent of GNI.
China’s loan amounted to $28.786bn or 22 percent of total debt, followed by World Bank’s $23.55bn which is 18 percent and $19.63bn from Asian Development Bank, 15 percent of the total.
According to the report, Saudi Arabia is the second largest bilateral lender to Pakistan with about $9.16bn or 7 percent.
Of the total external debt stock, $58.88bn or 45 percent is the share of bilateral lenders and $60.2bn (46 percent) of multilaterals, while 9 percent is shared by private lenders, led by bondholders with 8 percent.
The report said that long-term external debt stocks stood at $110.44bn, $11.53bn IMF credit and allocations and $8.878bn in short-term external debt. Pakistan received $12.945bn in 2023, while repaid $14bn, including interest payments of $4.33bn.
The World Bank reported that developing countries spent a record $1.4 trillion to service their foreign debt as their interest costs climbed to a 20-year high in 2023. Interest payments surged by nearly a third to $406bn, squeezing the budgets of many countries in important sectors like health, education, and environment.
The report highlighted that financial strain was fiercest for the poorest and most vulnerable countries — those eligible to borrow from the World Bank’s International Development Association (IDA). These countries paid a record $96.2bn to service their debt in 2023.
Although repayments of principal decreased by nearly 8 percent to $61.6 billion, interest costs surged to an all-time high of $34.6bn in 2023, four times the amount a decade ago. On average, interest payments of IDA countries now amount to nearly 6 percent of the export earnings of IDA-eligible countries — a level that hasn’t been seen since 1999.
The World Bank noted that for some countries, the interest payments run as high as 38pc of export earnings, but in case of Pakistan, it is at 43 percent of exports.
The bank said that South Asia reported the biggest yearly rise in interest payments on public and publicly guaranteed (PPG) debt in 2023 – rising 62 percent to $12.5bn. The increase was most noticeable in Bangladesh and India, whose interest payments increased by more than 90 percent in 2023. Pakistan made the second-largest interest payments in the region.
According to the report, low & middle-income countries’ (LMICs) tightened fiscal space and high interest rates have put many countries in weak fiscal positions because of elevated payments.
Interest payments as a share of export earnings — a measure of the repayment capacity of a country — significantly increased by 1.6 percentage points in 2023 to 5.8 percent, equivalent to an increase last recorded in 2005. Mozambique (38.3%), Senegal (25.9%), Pakistan (13.6%), Kenya (12.8%) and Dominica (10.3%) had the highest ratios of interest payments on total debt to export earnings, a situation that has weakened their fiscal positions.
It said IMF repurchases for LMICs, excluding Argentina, more than doubled in 2023 to $12.2bn, with the top repurchases registered from Egypt, Ukraine and Pakistan. In terms of volume, the top five LMIC recipients of personal remittances in 2023 were India at $119.5bn, followed by Mexico ($66.2bn), the Philippines ($39.1bn), China ($29.1bn) and Pakistan ($26.6bn).
