KARACHI: External debt servicing during the first quarter of current fiscal year reached $2.452 billion, accor­ding to data released by the State Bank of Pakistan (SBP).

The government paid off $1.9bn as principal and $0.55bn as interest accrued on the total debt. The government is in a tight spot as Pakistan’s debt servicing related requirements are estimated at $9.3bn in the ongoing fiscal year.

Minister for Finance Asad Umar has set a borrowing target of $12bn for the current fiscal year to meet the enlarged current account deficit. However, higher borrowing would simply lead to higher debt servicing costs which ate up $7.5bn of country’s foreign exchange rese­rves in the last fiscal year.

At this rate of $2.452bn a quarter, Pakistan’s debt servicing costs are likely to reach $9.8bn during the ongoing fiscal year.

In March this year, the International Monetary Fund (IMF) estimated Pakistan’s external debt servicing to reach over $19bn by 2023. Pakistan is currently negotiating a programme with the IMF to borrow funds but the talks went sour over the pace of reforms. The talks have been extended till January next year.

The PTI government has also sought help from Saudi Arabia, China and UAE — friendly nations — to arrange the required $12bn.

Published in Dawn, December 8th, 2018