Import/export growth

Exports are projected to grow from 7 to 10 per cent every year out till FY24, according to programme projections. In the last fiscal year, ended June 30, 2019, export growth was near zero. If the program projections are borne out, this will be the fastest pace of export growth the country has seen in well over a decade. But if the reality falls short of the projections, the resultant gap will need to be made up through other means to meet the reserve accumulation targets of the program. This could imply further borrowing, or perhaps an uptick in remittances, with consequences for the exchange rate.

External debt repayments

Pakistan is aiming to repay up to $37.359 billion of external debt and liabilities over the programme duration, projections in the staff report released on Monday show. More than 60 per cent of this amount will be paid to China, Saudi Arabia and the United Arab Emirates.

Of the $16.278bn being repaid of Non-Paris Club bilateral debt, $7.946bn will be to China, $6.265bn will be to Saudi Arabia and $2.016bn will be to the UAE.

Graph above gives breakdown of all categories of external debt and liabilities to be repaid over the program period.

Repayments/rollover of external debt

Substantial payment obligations kick in for short-term government debt — including amortisation and rollovers — from FY21. From next fiscal year, both rollovers and amortisation are scheduled to more than triple in size, and stay at elevated levels for the foreseeable future. Graph above gives amounts for amortisation and rollovers of short-term external debt as projected out to FY24 by the staff report.

Published in Dawn, July 9th, 2019