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May 16, 2018

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Pakistan’s external debt swells to $91.761 bn till end March

Pakistan’s external debt swells to $91.761 bn till end March

ISLAMABAD: Pakistan’s total external debt and liabilities (EDL) has peaked to $91.761 billion till end March 2018 against $60.9 billion in June 2013 so the EDL increased by $30 billion in last five years of incumbent PML-N led regime, official data shows.

According to official data of State Bank of Pakistan (SBP) showing on Tuesday that the external debt and liabilities went up to $91.761 billion till March 31, 2018 against $83.481 billion in June 2017, indicating the external debt and liabilities increased by over $8.5 billion just in last nine months. The rising current account deficit that had already crossed $12 billion mark in first nine months, forced the government for increasing reliance on external borrowings. More alarmingly, the foreign currency reserves were also depleting at the moment.

The overall public debt including domestic, external and liabilities in rupee term have touched Rs28,297 billion till March 31, 2018 indicating that each individual living in the country owed Rs136,700 debt burden keeping in view total population of 207 million in accordance with result of latest census.

The increasing burden will hike debt servicing on annual basis leaving no space in terms of resources for meeting all other pressing requirements of the country so chances of plunging into viscous debt cycles increases manifold.

However, according to definition of Ministry of Finance under amended Fiscal Responsibility and Debt Limitation Act, the total public debt stood at Rs22,059 billion till March 31, 2018 as it excluded certain liabilities from the debt burden of the government.

The SBP data shows that total external debt and liabilities stood at $91.761 billion out of which public external debt was $72.020 billion, The government’s external debt stands at $62.937 billion including Paris Club $12 billion, multilateral $28 billion, other bilateral $7.1 billion, Euro/Sukuk bond $7.3 billion, commercial loans $5.678 billion, Safe Chinese Deposits $500 million, IMF $6.343 billion, foreign exchange liabilities $3.7 billion and others. The IMF loan does not owe by the federal government but the country’s central bank owes this loan because it is used to support balance of payment position.

The public sector enterprises (PSEs) owed $2.741 billion as foreign debt while loans obtained by private sector stood at $7.645 billion. The situation of total public debt shows alarming situation as it went up to Rs28, 297 billion till March 31, 2018, equivalent to 82.3 percent of GDP. According to FRDLA definition of public debt used by Ministry of Finance, the debt in percentage of GDP stood at 64.1 percent by end March 2018 which was still on higher side against the desired limit to keep it at 60 percent of GDP. The external debt and liabilities in percentage of GDP stood at 30 percent. The external debt burden is important for the country’s sovereignty because dollars cannot print by any country.

Now the country was heading towards public debt to GDP ratio on the same level in which Islamabad used to be during the decade of 90s.

The government’s domestic debt stood at Rs16,074 billion, external debt in rupee term at Rs7,269 billion, debt from IMF Rs732.7 billion, external liabilities Rs432 billion, private sector external debt Rs1,416.2 billion, PSEs external debt Rs316.5 billion, PSEs domestic debt Rs996.4 billion, commodity operation Rs628 billion and intercompany external debt from direct investor abroad at Rs431.9 billion.

When contacted to renowned economist Dr Ashfaque Hassan Khan on Tuesday, he said that the stocks of external debt and liabilities would cross $95 to $96 billion till end June 2018 so the government was going to increase external debt in the range of $35 to $36 billion in last five year rule. “I am telling the national all along that the debt burden on external front is increasing at phenomenal pace and it has entered into danger zone,” he added.

This scribe contacted to Ministry of Finance high-ups who said that the FRDLA amended by the Parliament and the debt burden in percentage of GDP was under control. The size of the national economy is expanding so paying capacity of debt is also on rise. However, there is need to slash down the budget deficit in terms of mobilising domestic resources and curtailing expenditures, they added.

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