KARACHI: Pakistan’s total debt and liabilities rose to Rs45.470 trillion at the end of March 2021, showing an increase of Rs2.666 trillion or 6.2 percent a year earlier, State Bank of Pakistan's (SBP) data showed.
The debt and liabilities stood at Rs42.804 trillion in the period ended March 2020.
The pace of the debt build up, however saw a decline as the country’s debt and liabilities rose 1.97 percent in nine months. The overall debt and liabilities stood at 44.591 trillion till end-June 2020.
The debt and liabilities were equivalent to 97.4 percent of the gross domestic product.
The SBP’s data showed that the country’s total debt rose 7.2 percent to Rs43.445 trillion at the end of March 2021 from Rs40.542 trillion a year ago.
The liabilities declined 10.5 percent to Rs2.025 trillion.
The government domestic debt rose to Rs25.552 trillion as of March from Rs22.477 trillion a year ago. The domestic debt owed by the public sector enterprises increased to Rs1.467 trillion from Rs1.397 trillion.
The government external debt stood at Rs16.425 trillion as of March 2021, compared with Rs16.667 trillion in the same period of the last fiscal year.
The debt owed by the government to the International Monetary Fund rose to Rs1.164 trillion from Rs1.071 trillion.
Pakistan’s fiscal deficit clocked in at 3.6 percent of GDP (or Rs1,652 billion) in the nine months of this fiscal year, compared with 3.8 percent of GDP (or Rs1,686 billion) in the same period last year.
It translated into a decrease of 2 percent year-on-year during July-April FY2021. While the overall deficit remained in check, the government also managed to record a surplus in primary balance at 1.0 percent of GDP (or Rs452 billion), higher than agreed with the IMF.
The Debt Sustainability Analysis confirms that public debt remains sustainable with strong policies, but also points to risks from policy slippages and contingent liabilities, the IMF said in its latest staff report.
A gradual improvement in the primary balance remains the key fiscal anchor to ensure fiscal sustainability and build resilience.
The report said the authorities recognise that the elevated debt burden makes Pakistan susceptible to shocks and remain firmly invested in the program’s fiscal strategy based on spending discipline and an ambitious revenue mobilization effort supported by high quality, permanent tax policy measures and administration reforms.
In the medium term, Pakistan’s strategy aims to increase tax revenues by 3–4 percentage points of GDP. However, revenues during the program period are expected to remain below projections at the first Extended Fund Facility (EFF) review due to the challenge of the Covid-19 shock and resulting large revision to the growth outlook compared to the first EFF review.
Nevertheless, increasing revenues over the medium term will be essential to ensure debt sustainability while creating space for much-needed social and development spending.