ISLAMABAD: The debt servicing and defence budget have emerged as the biggest heads of expenditure as both will consume a mammoth amount of Rs5,473 billion, which is 57.6 percent of the total federal budget of Rs9,502 billion.
The defence budget has increased by 11.17 percent to Rs1,523 billion from Rs1,370 billion budgeted in 2021-23.
Likewise, debt servicing has surged by 27.42 percent to Rs3,950 billion from Rs3,100 billion in the outgoing fiscal year 2021-22. Out of the debt servicing of Rs3,950 billion for the next budgetary year, domestic interest has increased by 24.74 percent to Rs3,439 billion from Rs2,757 billion. And the interest on foreign loans also jacked up by 68.65 percent to Rs511 billion from Rs303 billion budgeted in the outgoing fiscal 2021-22.
However, the country’s total debt has alarmingly jacked up to Rs44.366 trillion in the first nine months of the current fiscal 2021-22 with debt servicing reaching Rs2.118 trillion, unfolds the economic survey 2021-22.
Out of the total public debt, it says, the domestic debt has gone up to Rs28.076 trillion, while external public debt swooped upward to Rs16.290 trillion or US$88.8 billion by end-March 2022.
The public debt portfolio witnessed various positive developments during the first nine months of the ongoing fiscal year as in front of domestic debt, the government relied entirely on long-term domestic debt securities for the financing of its fiscal deficit and repayment of debt maturities.
The government retired/repaid a portion of Treasury Bills amounting to Rs1.5 trillion, which led to a reduction of short-term maturities in-line with the government’s commitment to reduce its gross financing needs.
The government repaid Rs569 billion against the SBP debt in the first nine months of the current fiscal. The cumulative debt retirement against the SBP debt stood at Rs2.3 trillion from July 2019 to March 2022.
The government successfully issued the Shariah Compliant Sukuk instruments amounting to around Rs1.1 trillion, in line with the target specified in the Medium Term Debt Management Strategy of Pakistan (2019-20-2022-23), to increase the share of Shariah-compliant securities within domestic debt stock; Debt from multilateral and bilateral sources cumulatively constituted around 79 percent of the external public debt portfolio at end-March 2022.
In addition, Pakistan successfully raised US$1 billion in July 2021 through multi-tranche tap issuance of 5, 10 and 30-year Eurobonds. These bonds were issued at a premium. In January 2022, the Government of Pakistan successfully raised US$1 billion through the issuance of International Sukuk under the ‘Trust Certificate Issuance Program’.
The government repaid US$1 billion against maturing International Sukuks in October 2021. The government utilised the IMF allocated SDR equivalent to Rs475 billion to support its budgetary operations.Total interest servicing was recorded at Rs2.118 trillion during the first nine months of the current fiscal year against its annual budgeted estimate of Rs3.060 trillion.