Public debt piles up

Published June 9, 2023

ISLAMABAD: The economic survey for 2022-23 showed on Thursday the country’s total public debt reached Rs59.24 trillion at the end of March, with domestic debt amounting to Rs35.07tr and external debt clocking in at Rs24.17tr or $85.2 billion.

Within domestic debt, the government relied on long-term debt securities, predominantly the floating-rate Pakistan Investment Bonds (PIBs) and Sukuk for the financing of its fiscal deficit and repayment of debt maturities. The government retired treasury bills amounting to Rs527bn.

According to the survey, the government repaid Rs310bn of its debt owed to the State Bank of Pakistan (SBP). The cumulative debt retirement against the SBP stood at Rs2tr since July 2019.

Within the external debt, inflows from multilateral sources and foreign commercial banks remained major sources of loans. About $1.16bn was disbursed under the seventh and eighth reviews of the International Monetary Fund (IMF) programme.

Similarly, $1.5bn was received from Asian Development Bank under the Building Resilience with Active Countercyclical Expenditures (BRACE) programme.

Asian Infrastructure Investment Bank (AIIB) co-financed the BRACE programme to the tune of $500m. In addition, $1.9bn in loans from commercial banks was also refinanced.

The government rolled over $3bn deposits each from China and Saudi Arabia, which were utilised for budgetary support. The Saudi oil facility amounting to around $900m was utilised, around $100m each month.

The government repaid international commercial loans to the tune of $5.5bn, out of which $4.45bn was bank loans and $1bn was international Sukuk maturity.

With a narrow fiscal deficit, public debt is projected to enter a firm downward path while the government’s efforts to improve the maturity structure and expansion of the debt instruments base would help meet the financing requirements efficiently.

Published in Dawn, June 9th, 2023

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