KARACHI: Foreign debt and liabilities soared around 14 percent to $95.097 billion in the fiscal year ended June 30, the central bank’s data showed on Wednesday, as the country is struggling to meet its external financing requirement.
Foreign debt and liabilities stood at $83.431 billion till June 30, 2017, the State Bank of Pakistan’s (SBP) data showed.
Analysts said the country opted for expensive loans from bilateral and multilateral sources during the last fiscal year to finance its hefty current account deficit.
The current account deficit widened to $18 billion in the last fiscal year from $12.6 billion in the preceding fiscal year.
Economist Ashfaque Khan said imprudent fiscal policy caused higher current account deficit and forced the former government to heavily borrow from outside.
“My forecast for the current account deficit for the current fiscal year is $21.2 billion,” Khan said. “The external financing requirement is expected to be more than $31 billion.”
The country paid off $7.479 billion in external debt servicing during the last fiscal year, down 8.19 percent from the preceding fiscal year.
Foreign debt servicing in principal and interest amounted to $8.147 billion in 2016-17.
The SBP’s figures further revealed that the country’s public external debt amounted to $75.357 billion in June-end compared to $66.103 billion a year earlier. Loans from multilateral donors rose to $28 billion from $27.605 billion.
Debts from floating sukuk and Eurobonds increased to $7.3 billion till June-end from $4.8 billion a year ago. Foreign commercial loans accumulated to $7.261 billion compared to $4.826 billion.
Analysts said Pakistan has to make big debt repayments in the days to come, while foreign exchange reserves continue to fall.
The country’s official foreign currency reserves plunged to around nine billion dollars, ringing alarm bells for finance managers to resort to foreign funds.
Last week, officials told the Financial Times that the country planned to borrow more than four billion dollars from the Saudi-backed Islamic Development Bank as part of its attempts to restore dangerously low stocks of foreign currency.
The officials have already drawn up plans to borrow up to $12 billion from the International Monetary Fund — though such a bailout is likely to come with strings attached, such as a demand to see
the details behind billions of dollars’ worth of Chinese loans. Outstanding debt from the International Monetary Fund stood at $6.095 billion till June-end.