The central government’s total debt increased by 11.5 per cent in August this year from August 2020 while the external debt in rupees increased by 8pc in the first two months of the current financial year (2MFY22), according to a report by Dawn.
Based on the State Bank of Pakistan’s (SBP) latest report on government’s total debts, it was revealed that external debts also increased significantly by Rs1.3 trillion in a year’s time mainly on account of appreciation of US dollar against local currency.
However, the domestic debt of the central government increased by Rs70 billion in July-August period. The domestic debts increased to Rs26.335tr in August compared to Rs26.265tr in June.
The SBP’s report shows the external debt increased in July-August mainly on account of sharp appreciation of US dollar against the rupee. The total external debt in August was Rs13.436tr compared to Rs12.432tr in June, an increase of Rs1.004tr. Within a couple of months the external debt increased by over Rs1tr reflecting the impact of rupee depreciation.
The external debt was Rs12.123tr in Aug 2020, however, it rose 10.8pc to Rs13.436tr in August, an increase of Rs1.313tr.
Further, the Pakistan Tehreek-e-Insaf (PTI) government has planned to raise debt worth Rs5.87 trillion by offering sovereign securities to commercial banks over the next three months.
The funds to be raised through the issuance of treasury bills (T-bills) and Pakistan Investment Bonds (PIBs) would be partially utilised to pay off the maturing debt of Rs5.15 trillion. However, they will also add a net Rs720 billion to the public debt portfolio in the three months from October to December 2021.
It will borrow an additional Rs225 billion through the issuance of three to five-year PIBs at a floating (variable) interest rate against zero maturity as the floating rate bonds are relatively new.
