Pakistan’s total debt mounts to Rs18.9trn

Foreign debt servicing $6bln/year

KARACHI: Pakistan’s public debt rose 6.18 percent to Rs18.9 trillion in the six-month period to December 2015, but the debt-to-GDP ratio dropped to 61.5 percent, the central bank said on Thursday. 

The State Bank of Pakistan (SBP), in its quarterly economic review report, said the public debt stood at Rs17.8 trillion as on end-June 2015. 

The SBP said the major part of the public debt was domestic; however, the external debt also significantly increased.

According to the report, the country’s domestic debt expanded Rs687.1 billion in the first half compared to increase of Rs602.7 billion in the same period of the last year. During the first half, the government borrowed a net amount of Rs2.6 trillion from banks through primary auctions.

The central bank said the second quarter primary auctions showed an ease in government borrowing as it accepted Rs1.12 trillion lower than the target of Rs1.37 trillion and maturity of Rs1.14 trillion.

The SBP attributed the slowdown in government borrowing to substantial external inflows, Ijara Sukuk auction in December and mobilisation of Rs208.5 billion through outright purchase of the same instrument on deferred payment basis in November 2015.

External debt increased to $57 billion by end-December 2015 as compared with $54.67 billion in June 2015. The external debt servicing obligations are not more than six billion dollars per annum until 2020. 

“This amount of repayments doesn’t raise much concern, as the country has successfully met similar amount of obligations in FY13 and FY14,” the SBP said.  “Thus, debt servicing of $5.5 billion due this year (2016) are well within the manageable level, especially keeping in view the existing level the country’s forex reserves and an expected continuation of forex inflows.”

At the December-end, gross inflows received by the country included $561.4 million from China mainly for power sector infrastructure projects; inflows from the Asian Development Bank, including $47.2 million under Social Protection Development and $394 million for sustainable energy reform; $489.4 million from International Development Association under power sector reform development; and $500 million as proceed of the Eurobond issued in 2015.  

The SBP said external debt servicing declined $549 million to $1.65 billion during the first half of the current fiscal year as compared to $2.2 billion in the same period of the last fiscal year. That was due to a significant fall in repayment to the International Monetary Fund to $74.3 million for the period under review as compared to $874.4 million as at June 30, 2015.