Pakistan Added Rs 984 Billion in its Loans in Just Last Three Months

Pakistani government continues to borrow money from both foreign and local lenders. Pakistan added Rs 984 billion in its loans in three months. The total loans and liabilities stand at Rs 30.9 trillion. The increase comes amid concerns over a rapid rise in the debt burden in coming months owing to currency depreciation and interest rate hike.

According to the figures released by State Bank of Pakistan showed overall debt increased by 3.3 % in three months. Of the Rs. 30.9 trillion, the gross public debt, which is the direct responsibility of the government, stood at Rs. 25.8 trillion. There was an increase of Rs. 839 billion in the gross public debt in three months, which was far higher than the overall budget deficit of Rs. 542 billion for the period.

The main behind the higher debt was the increase in interest rate and depreciation of the rupee during July-September 2018. A single rupee devaluation adds Rs. 97 billion to the public debt. Similarly, a 1% increase in interest rate increases the cost of debt servicing by roughly Rs. 180 billion. This ultimately increases borrowing requirements of the finance ministry.

The government’s domestic debt surged to Rs. 16.9 trillion with an addition of Rs. 507 billion in first three months of the current fiscal year.

The government’s external debt increased to a record Rs. 8.1 trillion by the end of September, a net addition of Rs. 327 billion in three months. The total external debt and liabilities surged to Rs. 12 trillion on the back of currency devaluation. The non-government external debt has also crossed Rs. 2 trillion.