The country's external debt servicing crossed a billion-dollar mark during the first quarter of the current fiscal year 2012-2013 (FY13) mainly because of a high burden of foreign debt and IMF loan repayments. Sources in the banking sector told Business Recorder on Tuesday that payments under external debt servicing continued to surge, adding that the country spent over a billion-dollar on external debt servicing of principal and interest payments.
Expressing serious concern over the increase in spending on debt servicing, economists termed it an alarming situation for policy markers. "High payments on foreign debt servicing will put a negative impact on the country's liquid forex reserves, which are already on decline," they said.
Pakistan already failed to get full payment under an IMF Stand-By Arrangement (SBA) facility, availed to build up the country's liquid forex reserves, sources said. The overall debt servicing is likely to increase for during the remaining period of FY13 in view of massive repayments of IMF's SBA loans due in the second half of FY13.
"Currently, Pakistan is able to manage its debt servicing and successfully make repayments on IMF and other loans. However, in the long term, Pakistan may face some problems and may need another IMF program to maintain its forex reserves," souces said.
The decline in SBP reserves also reflects lower inflows and higher foreign payments against inflows, especially from donor agencies which remained much below projections, while debt servicing increase by comparison with last year, they said.
According to State bank of Pakistan (SBP) the country's total external debt servicing touched $1.107 billion mark during the first quarter of (July-September) of FY13. Totalled external debt and servicing, during the period under review, includes $903 million of principal and $204 million of interest payments.
Similarly, on principal amount side, external debt servicing under public debt stood at $819 million, some $6 million on Public Sector Enterprises (PSEs) guaranteed debt, $44 million on PSEs non-guaranteed debt and $30 million on private non-guaranteed debt. Servicing under public debt include $444 million of IMF, $23 of Paris Club and $322 million of Multilateral.
Debt servicing on account of interest includes some $31 million to IMF, $12 million to Paris Club, $30 billion of Euro/ Sukuk global bonds and $70 million of Multilateral. The total external debt servicing stood at $4.3 billion in FY12, including $1.019 billion of interest payment and $3.294 billion of principal amount.
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