External debt, liabilities rise to $127bln in first quarter

KARACHI: Pakistan’s foreign debt and liabilities (outstanding) increased by $4.8 billion or 4 percent to $127 billion at the end of September 2021, the central bank data showed on Wednesday.

The external debt and liabilities (EDL) were $122.2 billion as of June 30, 2021.

The foreign debt and liabilities was 40.2 percent of the country’s gross domestic product at end-September, compared with 40.3 percent in June.

The EDL stood at $114 billion in the period ended on September 30, 2020.

The EDL maintained its upward trend due to the government’s dependence on foreign borrowings to make payments of its outstanding loans, fund current account deficit and accumulate foreign exchange reserves.

A large chuck of the foreign debt comes from long-term loans obtained from international financial institutions, multilateral agencies, and the Paris Club and the share of sovereign bonds in the debt is relatively low.

An expansion in the EDL originated from both the public and the private sectors. A large increase in the external debt was sourced through disbursements from multilateral donors.

As of September 30, 2021, the public external debt was worth $99.667 billion. It stood at $95.187 billion in the last fiscal year.

The government’s external debt rose to $80.950 billion in the year to end September from $79.040 billion till the end of June 2021.

Long-term foreign debt stood at $79.660 billion at the end of September, up from $78.182 billion at the end of the last fiscal year.

Debt built through multilateral sources rose to $34.2 billion from $33.8 billion at the end-June 2021.

Loans from bilateral sources stood at $14.887 billion, compared with $14.887 billion at end-June, 2021.

Debt accumulated through the IMF was $7.073 billion from $7.384 billion.

Pakistan re-entered the international capital market after a gap of more than three years.

Debt taken through Euro Sukuk bonds rose to $8.80 billion from $7.80 billion.

Foreign investment in long-term government securities also saw an increase. Debt through Naya Pakistan Certificates rose to $1.120 billion from $776 million.

The revival of the IMF programme will help Pakistan secure loans from other bilateral and multilateral agencies, which bodes well for the country’s foreign exchange reserves. The profile of public external debt has improved as the entire increase in external debt emanated from long-term instruments, whereas, the government retired a part of short-term debt.