ISLAMABAD, March 4: Pakistan’s total public debt increased by Rs1.465 trillion to Rs4.411 trillion over the last seven years, showing a rise of almost 50 per cent from Rs2.946 trillion in 1999.

A ‘Debt Policy Statement’ issued by the finance ministry reveals that total domestic currency debt also jumped by Rs957 billion to Rs2.346 trillion in the first quarter of 2007 from Rs1.389 trillion in 1999, registering an increase of about 69 per cent. Likewise, the foreign currency debt went up by Rs508 billion to Rs2.065 trillion in the first quarter of 2007 from Rs1.557 trillion in 1999, up by 32.6 per cent in seven years.

The report says total public debt increased by 165 per cent since 1995 when it stood at Rs1.662 trillion. Its two components, domestic currency and foreign currency debt surged by 197 per cent and 136.5 per cent, respectively, since 1995.

“The coming years will see an increase in borrowing particularly in foreign currency component to finance the infrastructural development programme. The large infrastructure projects envisaged in the next decade will increase the debt burden if sufficient revenues are not generated from within the country,” says the report released by director-general, debt, Dr Ashfaq Hassan Khan.

The report says the country’s total outstanding domestic debt reached Rs2.422 trillion by the end of November 2006, showing an increase of 36.5 per cent (Rs648 billion) since fiscal year 2002 when it stood at Rs1.774 trillion. Of this, the permanent debt (prize bonds and other government bonds) increased by 20 per cent to Rs509 billion in November 2006 from Rs424 billion in 2002.

Similarly, floating debt (in the shape of treasury bills) increased by 86 per cent to Rs1.035 trillion in November 2006 from Rs558 billion in 2002. The unfunded debt (mostly from saving schemes) went up by about 11 per cent or Rs86 billion to Rs877 billion from Rs792 billion in 2002.

The report said that at the end of fiscal year 2006, the total domestic debt stood at Rs2.312 billion which was 30 per cent of GDP. The net increase in domestic debt was Rs1.53 billion from the end of fiscal year 2005 where domestic debt was Rs2.158 billion. “This represents a growth rate of 7.1 per cent which is slightly higher than the average growth rate since fiscal year 2000 of 6.6 per cent but still lower than the pace of growth in domestic debt observed in 1980s and 1990s which were 20 per cent and 16 per cent, respectively.”

The report said the total external debt and liabilities increased by more than six per cent to $37.72 billion in the first quarter of 2007 from $35.47 billion in fiscal year 2003. Of this, public and publicly guaranteed debt rose by 13.4 per cent to $33.15 billion this year, compared with $29.23 billion in 2003.

The external debt and liabilities at the end of fiscal 2006 were $37.26 billion. This is an increase of $1.43 billion which represents a four per cent increase over the stock at the end of fiscal 2005.

The report, however, maintains that such a massive increase in overall stock of public debt should be seen in the context of gross domestic product and revenues because “the capacity of carry debt is dependent on the size of the economy as well as resources available to the government to service that debt”.

On the basis of these parameters, the public debt at the end of fiscal year 1999 was about 629 per cent of total revenue and came down to 356 per cent of total revenue. Similarly, the total public debt was 100 per cent of GDP in 1999 and has come down to 50 per cent in the first quarter of 2007.

The ministry assumes that if no new loans are taken, the existing external loans will take about 30 years to be repaid at a rate not exceeding $1.6 billion per annum, although $3.1 billion was paid out in fiscal year 2006 as debt servicing and $3.05 billion worth of new loans were signed in 2006.