External debt, liabilities surpass $105bln till March-end

ISLAMABAD: Pakistan’s external debt and liabilities (EDL) have climbed to $105.841 billion from $95 billion during the first nine months of the current fiscal year of 2018/19, posing challenges to the struggling economy, sources said on Saturday.

That indicated external debt and liabilities (EDL) increased $10 billion under the tenure of the incumbent regime.

“The EDL has been increasing at a supersonic speed, posing serious vulnerabilities of the economy over the medium to long term period,” a source told The News.

The psychological barrier of $100 billion mark was crossed during the third quarter (January-March) period of the current fiscal year. The EDL stood at $99 billion till end of December 2018.

The disbursement of foreign loans has so far remained slow during the current fiscal year, but the reliance on foreign debts is on the rise owing to external account gap. Current account deficit however narrowed 30 percent from $19 billion in the last fiscal year and it is projected to fall to $12.5 billion till June-end.

Public external debt stood at $84 billion till March 2019 out of which the government’s external debt was standing at $68 billion.

The country owes debt to Paris Club ($11.3 billion), multilateral and other donors ($27 billion) and international bonds such as Eurobond and sukuk ($12 billion).

The country has also obtained commercial loans to the tune of $8.8 billion and a short-term loan of less than one year stood at $1.1 billion.

The outstanding loan of the International Monetary Fund (IMF) stood at $5.765 billion.

Last week, Pakistan and the IMF struck a staff level agreement for a fresh bailout package of $6 billion that would pave the way for resumption of policy loans from the World Bank and the Asian Development Bank.

Pakistan will also launch international bonds in the next fiscal year and therefore foreign debt is set to escalate in months and years ahead. The IMF has also done debt sustainability assessment and will make it public after an approval of the bailout package from its executive board probably by June-end or early July this year.

Debt servicing has now become the largest ticket item on expenditures front in the federal budget in the wake of huge domestic and foreign borrowings.

Debt servicing is estimated to touch Rs2.1 or Rs 2.2 trillion for the current fiscal year.

Debt repayments have so far consumed around $5 billion during the current fiscal year and it would further mount till the end of the current fiscal year.