Amid an ongoing debate over foreign debt, the government has conceded receiving loans of $26.124bn and grants of $1.64bn in three years, from Dec 1, 2013 to Nov 30, 2016.

In response to a question from Muhammad Muzammil Qureshi, MNA, Finance Minister Ishaq Dar reported in writing that total foreign loans and grants amounted to around $27.8bn.

The largest chunk of the loan came in the shape of $6.4bn from the IMF, followed by $4.5bn bonds from the international capital market. The World Bank’s share was $4.4bn, the Islamic Development Bank’s $2.7bn and the Asian Development Bank provided $2.43bn. The Chinese government and the China Development Bank put together $2.9bn.

In response to a question from an MNA, Finance Minister Ishaq Dar reported in writing that total foreign loans and grants amounted to around $27.8bn

Mr Dar said the government repaid $12bn foreign loans in three years.

Separately, in its Debt Policy Statement 2016-17, the ministry of finance reported that the stock of public external debt has now touched $58.7bn at the end-September 2016 against $48.1bn at end-June 2013.

The total external debt (including private sector, public sector entities and banks) reached $71bn as of end-September 2016 against $57.8bn in 2013.

Total external debt and liabilities, on the other hand, rose to $74.6bn from $60.9bn during the same period.

Required under the Fiscal Responsibility and Debt Limitation Act, the policy statement said that external public debt servicing declined for the second consecutive year and recorded at $4.34bn during 2015-16 as compared to $4.475bn a year before. When adjusted for rollovers, external public debt servicing increased from $5.47bn in 2014-15 to $5.59bn in 2015-16.

This decline was mainly due to lower principal repayments made to the IMF. Servicing of public external debt in first quarter of the current fiscal year (up to end September 2016-17) was recorded at $1.3bn which actually goes beyond $2.3bn in the first quarter if rollovers are also accounted for.

The debt policy statement said there was limited pressure from external debt repayments in the medium term because projected principal repayments to the IMF against the EFF programme were stretched over a longer timeframe, starting at $0.2bn in 2018 and rising to $0.8bn in 2020, with final payment due in 2025.

An amount of $0.75bn due in June 2017 is the only Eurobond maturing until 2019 while repayments for official development assistance from the Paris Club began in 2016 but are over a 23-year period.

The policy statement said the net public debt increased to about Rs18.3tr at end-September 2016, up from Rs13.48tr in 2013. Gross public debt was pitched at Rs20.54tr in September last year against Rs14.32tr in 2013, registering an increase of 43.4pc.

Putting the net domestic debt at Rs14.4tr in September 2016, the debt policy statement said this had increased from Rs8.6bn in 2013, showing an increase of 67pc. External debt in Pak rupee stood at Rs6.14tr in September, up 28pc from Rs4.8tr in 2013.

The net public debt to GDP ratio in rupee terms remained unchanged at 60.2pc in 2013 and end-June 2016 and is estimated further down at 54.5pc at end-September 2016 as the size of GDP increased from Rs22.38tr in 2013 to Rs33.5tr in September 2016.

The DPS said the increase in public debt was higher than financing of fiscal deficit during 2015-16.

Apart from fiscal deficit, increase in government credit balances with the central bank and commercial banks, debt from the IMF and dual revaluation loss on account of depreciation of the US dollar against other foreign currencies, as well as depreciation of Pak rupee against the dollar, contributed to the increase in public debt.

External debt in dollars increased by 13pc during 2015-16 due to net external inflows and revaluation loss due to depreciation of dollar against other foreign currencies.

It went on to add that a large part of the increase in external debt was contributed by concessionary borrowing from international financial institutions which also contributed towards reducing the cost of overall public debt portfolio and the government was able to meet the IMF ceiling on borrowing from the central bank and zero quarterly limit.

The DPS said the cost of domestic borrowing has substantially reduced as the weighted average interest rate on government domestic debt was reduced to a single digit as at end June 2016. Accordingly, the government interest expenditure reduced to 26pc of total revenue during 2015-16 as compared to 31pc in 2014-15.

Domestic debt recorded an increase of Rs772bn during first quarter of the current fiscal year while government domestic borrowing for financing fiscal deficit was Rs369bn during this period.

The differential is mainly because of government credit balance with SBP/commercial banks during first quarter of current year which was mostly utilised by the government in October 2016.

Under the amended FDRLA 2015, the government is now required to limit fiscal deficit excluding foreign grants to 4pc of GDP during the three years beginning from fiscal year 2017-18.

It said the amended law required reducing total public debt to 60pc of GDP within a period of two years beginning 2016-17.

The public debt to GDP ratio witnessed an increase in 2015-16 despite reduction in fiscal deficit that was contributed by dual revaluation loss, IMF inflows and increase in credit balances but the government would deliver on the target of reducing this to 60pc by 2017-18 as required under the law.

The law requires the government to reduce public debt by 0.5pc of GDP every year between 2018-19 and 2023 and then 0.75pc annually until 2033.

Published in Dawn, Business & Finance weekly, February 6th, 2017