Public debt rises 23.5pc to Rs47.8tr in FY2022

KARACHI: Pakistan’s public debt rose 23.5 percent to Rs47.8 trillion in the last fiscal year, the central bank data showed on Monday, due to increased government borrowing to bridge budget deficit.

The debt increased by Rs3.145 trillion a month-on-month in June, the highest ever monthly increase. Higher borrowing from commercial banks to finance the budget deficit due to dried external funding led to the rise in the central government's domestic debt, which increased 18.2 percent to Rs31 trillion in FY2022.

The debt increased 6.9 percent month-on-month. It came at Rs29 trillion in May 2022. The external debt surged 34.6 percent to Rs16.7 trillion in FY2022. It rose 7.4 percent month-on-month.

The SBP’s data showed that the country’s total debt-to-gross domestic product ratio increased to 71.4 percent in the last fiscal year, compared with 69.4 percent in FY2021.

Pakistan saw a record budget deficit of Rs5.5 trillion in FY2022, breaching an annual target of Rs4.4 trillion. The increased spending requirement for giving fuel subsidies and delay in the resumption of the International Monetary programme and lack of external financing contributed to the rise in the public debt.

The public debt also continued to go up due to higher interest payments amid an increased interest rate environment. The long-term debt rose to Rs23.7 percent from Rs24.2 trillion in FY2022. The short-term debt was Rs6.8 trillion, compared with Rs6.6 trillion by the end of June 2021.

Pakistan’s total debt and liabilities increased 25 percent to Rs59.69 trillion in FY2022 from Rs47.84 trillion a year earlier. The debt and liabilities were equivalent to 89.2 percent of the gross domestic product, compared with 85.7 percent of GDP in FY2021.

The country’s foreign debt and liabilities increased to $130.2 billion in the fiscal year ended June 30, 2022, from $122.2 billion a year ago as the country borrowed more from multilateral donors and bilateral sources to improve its repayment capacity and shore up forex reserves.