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KARACHI: Pakistan’s public debt increased to Rs16.936 trillion during the first nine months (July-March) of this fiscal year from Rs15.99tr last year, the provisional figures of the economic survey revealed on Thursday.
However, as percentage of GDP there is a marginal improvement as public debt has declined to 61.8 per cent from 62pc during the same period last year.
Public debt recorded an increase of Rs940 billion during the period under review as compared with Rs1,272bn during the same period last year.
According to the survey, the increase was primarily due to domestic debt that positioned at Rs11.932tr, representing an increase of Rs1.012tr. Whereas, external debt posted at Rs5.004tr, showed a decline of Rs72bn as compared to end-June 2014.
The external debt declined despite net external inflows, which is mainly attributed to huge translational gain of around $4.3bn on account of appreciation of US dollar against other major currencies.
The document said that the composition of public debt further improved during the period under review, mainly due to increased mobilisation through Pakistan Investment Bonds (PIBs), as share of permanent debt increased to 41pc of total domestic debt as of end-March 2015 as compared with 37pc at the end of last fiscal year.
Government was able to reduce its rollover/re-financing risk significantly through lengthening of maturity profile of its domestic debt i.e. share of short-term floating debt decreased to around 38pc of total domestic debt as of end-March 2015 compared with around 55pc at the end of 2012-13.
The persistence of revenue deficit indicates that the government was not only borrowing to finance its development expenditure, but partially to finance its current expenditure, said the survey.
Revenue deficit reduced in 2013-14 at Rs173bn, 0.7 per cent of GDP, as compared to Rs649bn (2.9pc) in 2012-13.
During July-March FY15, revenue deficit was recorded at Rs497bn, 1.8pc of GDP.
Fiscal deficit was recorded at 3.8pc of GDP. Government financed around 13pc of its fiscal deficit from external sources during the period, the document said.
Public debt servicing, during July-March FY15, was recorded at Rs1.193tr against the annual budgeted estimate of Rs1.686tr, said the survey. It consumed nearly 44.5pc of total revenues against a ratio of 47pc during the same period last year.
Ideally, this ratio should be below 30pc to allow the government allocate more resources towards social and poverty related expenditures.
Domestic interest payments were recorded at Rs911bn during the period as compared to Rs855bn in the same period last year.
In relation to GDP, the domestic debt stood at 43.6pc as of end-March 2015.
During the period, External Debt and Liabilities (EDL) was dominated by Public and Publically Guaranteed (PPG) debt having share of around 74pc. EDL stock was recorded at $62.6bn, out of which external public debt was $49.1bn.
Public external debt witnessed a decline of $2.3bn despite net positive disbursements.
During July-March 2014-15, disbursements including loans and grants stood at $4,001 million compared with $2,301m in the same period last year.
Pakistan also received $2,106m from IMF.
“Importantly, net inflows from the IMF stood at $1,041m during first nine months of current fiscal year compared with net outflow of $861m during the same period last year.”
EXTERNAL DEBT SERVICING: Annual debt obligations have increased since 2008-09 and stood at $8.697bn in 2013-14.
An amount of $1.528bn of multilateral debt, together with $3.182bn of the IMF loans, accounted for most of these obligations.
“This was the first time Pakistan made such large repayments of debt in a single year.”
“Servicing of EDL fell by $1.282bn in first nine months of current fiscal year as compared to the same period last year and recorded at $5.303bn.”
Out of this total, principal repayments were $3.291bn and interest payments were $812m, whereas an amount of $1.2bn was rolled over, the survey said.
Published in Dawn, June 5th, 2015
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