Foreign debt, liabilities reach $130.6bn at end-Dec

KARACHI: Pakistan’s foreign debt and liabilities (outstanding) ticked up 6.89 percent to $130.6 billion in the six months of this fiscal year, latest figures showed, as the government has been unable to finance its yawning budget deficit without borrowing from international donors.

According to number released by State Bank of Pakistan (SBP), the external debt and liabilities (EDL) clocked in at $122.2 billion at the end of June 2021.

The EDL stood at $127 billion in the period ended on September 30, 2021. These debt and liabilities were $117.1 billion at the end of December 2020.

The EDL continued to go up as the government obtained loans from international financial institutions, multilateral agencies and the Paris Club, and the commercial sources to meet budget deficit, finance the current account gap and accumulate foreign exchange reserves.

As of December, 31, 2021, the public external debt was $102.2 billion. It stood at $95.1 billion at the end of June 2021.

The government’s external debt rose to $83.9 billion in the year to end December from $79.040 billion till the end of June 2021.

Long-term foreign debt stood at $82.6 billion at the end of December, up from $78.1 billion at the end of the last fiscal year.

Debt, built through multilateral sources, rose to $34.6 billion from $33.8 billion at the end-June 2021.

Loans from bilateral sources stood at $17.9 billion, compared with $14.9 billion at end-June, 2021.

Debt obtained through the IMF was $6.7 billion from $7.4 billion. Debt taken through Euro Sukuk bonds remained unchanged at $7.80 billion.

Foreign investment in long-term government securities also witnessed an increasing trend. Debt, through Naya Pakistan Certificates, increased to $1.4 billion from $776 million.

The increase in the EDL may put further pressure on the foreign exchange reserves. The central bank’s forex reserves declined by $289 million to $16.806 billion as of February 18 due to external debt repayments.

The cost of debt servicing also went up. The servicing of external debt rose to $4.3 billion in the second quarter of FY2022 from $1.6 billion three months before.

The government repaid $3.4 billion in principal and paid $862 million in interest in October-December FY2022, the SBP’s data showed. It repaid $1.2 billion in principal and paid $443 million in the interest last year.