According to the latest report of State Bank of Pakistan (SBP), the total debt and liabilities of Pakistan stands at record high of Rs 40,214 billion. The total debt stands at Rs 37,748 billion and liabilities stands at Rs 2466 billion. The total debt and liabilities has increased from Rs 29879.4 billion to Rs 40,214 billion. It has been an increase of more than Rs 10,000 billion in a year.
The loans and liabilities grew at the rate of 36.6% during the financial year of 2018-19. It is the first time that Pakistan’s total loans and liabilities stand at 104% of GDP. The psychological barrier of $100 billion mark was crossed during the third quarter (January-March) period of the current fiscal year. The EDL stood at $99 billion till end of December 2018.
The external debt and liabilities have crossed $105 billion mark till end March 2019. The disbursement of foreign loans has so far remained slow during the current fiscal year, but the reliance on foreign debts is on the rise owing to external account gap. Current account deficit, however, narrowed 30 per cent from $19 billion in the last fiscal year, and it is projected to fall to $12.5 billion till June-end. Public external debt stood at $84 billion till March 2019 out of which the government’s external debt was standing at $68 billion.
The country owes debt to Paris Club ($11.3 billion), multilateral and other donors ($27 billion) and international bonds such as Eurobond and Sukuk ($12 billion). The country has also obtained commercial loans to the tune of $8.8 billion and a short-term loan of less than one year stood at $1.1 billion. The outstanding loan of the International Monetary Fund (IMF) stood at $5.765 billion.
The PTI government continues with the policy of borrow and spend. For the first time in its history, Pakistan borrowed a whopping $16 billion in foreign loans in just one year aimed at avoiding default on international debt obligations and financing its imports.
Out of the $16 billion, the PTI government took $13.6 billion worth of loans – the highest ever by any government in a single year. The remaining $2.4 billion had been received in July 2018 during tenure of the caretaker setup.
The $16-billion loans in the just-ended fiscal year included disbursement of $5.5 billion by Saudi Arabia, the United Arab Emirates and Qatar.
In the preceding fiscal year 2017-18, Pakistan had obtained $11.4 billion in foreign loans. Loans of $16 billion in FY19 were the highest ever external borrowing in any fiscal year since Pakistan’s creation. About 42% or $6.7 billion of the total external borrowing came from China alone. It included $2.54 billion in commercial loans, $1.6 billion under the China-Pakistan Economic Corridor (CPEC), $2 billion in China SAFE deposit and $628.4 million for Karachi nuclear power plants.
Hammad Azhar economic affairs minister stated that the government returned $9.5 billion in foreign loans in the last fiscal year. This means that the government has added at least $6.5 billion to the public debt in its first year in power.
This is the third time in Pakistan’s history that any government has taken over $10 billion in fresh foreign loans in a single year. The $16 billion in loans were 71% or $6.7 billion higher than the government’s own estimates.
The government had to heavily rely on foreign loans due to a steep decline in foreign direct investment, negative growth in exports, although contained but a still higher import bill and above all repayment of maturing debt.
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