ISLAMABAD: Pakistan’s total public debt was recorded at Rs 67,525 billion at the end-March 2024, registering an increase of Rs4,644 billion (7.3 percent) during first nine months of current fiscal year, as it stood at Rs62,881 billion on June 30,2023, the Economic Survey 2023-24 noted.
External public debt was recorded at $86.7 billion (Rs24,093 billion) at end-March 2024, revealing an increase of around $2.6 billion during the first nine months of the current fiscal year, given in the Economic Survey 2023-24, however it does not contain liabilities of foreign exchange, public sector enterprises (PSEs), banks and private sector.
Domestic debt was recorded at Rs 43.432 trillion, revealing an increase of Rs 4.6 trillion from Rs38.810 trillion on June 30, 2023, the survey noted.
Public debt soars to Rs39.7trn, NA told
According to the State Bank of Pakistan (SBP) data total external debt liabilities stood at $130.401 billion by March 2024 which contains, government external debt, short term, from International Monetary Fund (IMF) as well as liabilities of foreign exchange, public sector enterprises, banks and private sector. It was $126.141 billion by end June 2023, as per the SBP data.
The Rs 4644 billion include Rs (1,180) billion of federal primary deficit, Rs 5,518 billion interest on debt, Rs 306 billion on other (Exchange Rate/Cash Balances/Accounting impact).
External public debt was recorded at $86.7 billion at end-March 2024, revealing an increase of around $2.6 billion during the first nine months of the current fiscal year. This increase reveals: (i) the debt stock of multilateral sources increased by $1.7 billion. The main gross inflows included $1.9 billion from IMF program, $1.4 billion from World Bank, $ 657 million from ADB and $ 300 million from AIIB. Multilateral loans are mostly contracted on concessional terms i.e., low interest rate and long tenor; (i) bilateral debt stock increased by $ 648 million. The main gross inflow was $ 2,000 million from Saudi Arabia in terms of bilateral deposit; (iii) the debt stock of commercial bank loans and Eurobonds witnessed no change; (iv) The stock of Pakistan Banao Certificates, Naya Pakistan Certificates, and non-resident investment in Government securities (T-bills & PIBs) cumulatively increased by $275 million.
Gross external loan disbursements were recorded at $ 6,267 million during the first nine months of fiscal year 2024 including disbursements from multilateral sources amounted to $ 2,706 million. The main contributors were World Bank – US$ 1,432 million, Asian Development Bank (ADB)– US$ 657 million, and AIIB – 300 million; bilateral sources contributed US$ 2,780 million. Out of this, the new deposits from Saudi Arabia were US$ 2,000 million; Naya Pakistan Certificates inflows were recorded as US$ 781 million.
External public debt repayments were recorded at $ 5,330 million during the first nine months of fiscal year 2024, of which, US$ 2.8 billion were repayments against multilateral debt, $ 2.0 billion against bilateral debt, US$ 0.6 billion against Naya Pakistan Certificates. Interest payments were recorded at $ 2,639 million during the first nine months of fiscal year 2024.
The survey noted that external loans are contracted in various currencies; however, disbursements are effectively converted into Pak Rupee. Since Pak Rupee is not an internationally traded currency, other international currencies are bought and sold via selling and buying of the US Dollar. Hence, the currency exposure of foreign debt originates from two sources: US Dollar/other foreign currencies and Pak Rupee/US Dollar. Thus, any movement in international currencies (in which debt is contracted) and PKR vis-à-vis US Dollar can change the Dollar and Pak Rupee value of external debt respectively. It must, however, be taken into account that domestic debt does not carry currency risk since it is denominated in Pak Rupee. In addition to net external inflows, the following factors influenced the movement in external public debt stock during the first nine months of the current fiscal year: In US Dollar terms, revaluation gains owing to appreciation of the US Dollar against other international currencies decreased the external public debt stock by around US$ 293 million. This increase was mainly driven by appreciation of the US Dollar against Euro by 0.6 percent, Japanese Yen by 4.6 percent, Pound Sterling by 0.3 percent, and Special Drawing Right (SDR) by 0.5 percent; PKR appreciation against US dollar by around 3 percent resulted into decrease in external public debt by around Rs 732 billion when reported in Pakistani rupees.
The survey noted that permanent debt constituted 72 percent of the domestic debt portfolio and was recorded at Rs 31.2 trillion at end-March 2024, representing an increase of Rs 5.7 trillion during the first nine months of the ongoing fiscal year. The bifurcation of this increase reveals that Government net mobilization through the issuance of PIBs and GIS was Rs 4.2 trillion and Rs 1.5 trillion respectively.
Floating debt was recorded at Rs 8.5 trillion or around 20 percent of the total domestic debt portfolio at the end-March 2024. During the first nine months of the ongoing fiscal year, a reduction of Rs 0.8 trillion was witnessed in the stock of T-bills.
The stock of unfunded debt stood at Rs 2.8 trillion at end-March 2024, constituting around 6 percent of the total domestic debt portfolio. Unfunded debt recorded a net reduction of Rs 135 billion during the first nine months of the current fiscal year.
The other components of domestic debt comprise of following at end-March 2024: (i) Naya Pakistan Certificates (held by residents only) amounted to Rs 94 billion; (ii) SBP on-lending to Federal Government against IMF Special Drawing Rights (SDRs) allocation amounted to Rs 475 billion; and (iii) loans from banks other than securities amounted to Rs 361 billion. This component refers to foreign currency denominated domestic debt. Interest expense was recorded at Rs 5,517 billion during the first nine months of the current fiscal year against its annual budgeted estimate of Rs 7,302 billion. Interest expense on domestic debt was recorded at Rs 4,807 billion, which is 55 percent higher as compared to interest expense on domestic debt in same period of preceding year. The main reasons for increase is due to high cost of borrowing on new domestic debt and resetting of existing floating rate debt at higher rates (around 74 percent of domestic debt is floating rate) on back of higher policy rate.
Copyright Business Recorder, 2024
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