KARACHI, June 5: Pakistan’s total external debt and foreign exchange liabilities fell from $36.532 billion by end of June 2002 to $35.583 billion by end of March 2003, showing a decline of $949 million in nine months.

According to the Economic Survey released on Thursday, external debt and foreign exchange liabilities had already been reduced by $1.386 billion in two years ending June 2002.

“Pakistan has not only succeeded in reducing external debt but at the same time built up substantial foreign exchange reserves,” says the report. In other words, total external debt and foreign exchange liabilities when adjusted for the SBP liquid reserves stood at $36.929 billion by end of June 200. The net debt and foreign exchange liabilities have been reduced to $26.498 billion by end of March 2003 — a reduction of $10.431 billion in less than three years.

As percentage of GDP, external debt and liabilities that stood at 64 per cent by end of June 1999, declined to 60.2 per cent by end of June 2002, and is projected to decline to 50.4 per cent by end of June 2003. More importantly, the net external debt and liabilities have declined from 60.8 per cent of GDP by end of June 2000 to 53.1 per cent by end of June 2002, and is projected to decline to 37.9 per cent by end of June 2003.

“In order to achieve sustainability of external debt, the government is contemplating pre-paying some of the expensive debts,” says the Economic Survey. The debt office of the Ministry of Finance is currently engaged in identifying expensive debts and examining their terms and conditions associated with pre- mature payments. Beginning from the next fiscal year, the government would like to start pre-paying expensive debts.

DEBT SERVICING: The debt servicing payments in the current fiscal year are projected to increase by 18 per cent to $1.416 billion as against the payment of $1.2 billion in the last fiscal year due to higher cost and maturity of the previous loans.