Total public debt recorded at Rs44.366tr

With the ever increasing debt burden on the country, the total public debt was recorded at Rs44,366 billion (Rs44.366 trillion) at end-March 2022, Economic Survey of 2021-22 revealed.

As per the survey, the domestic debt was recorded at Rs 28,076 billion, while external public debt was recorded at Rs16,290 billion or $ 88.8 billion at end-March 2022.

The public debt portfolio witnessed various positive developments during the first nine months of the ongoing fiscal year (July-March FY2022). Within domestic debt, the government relied entirely on long-term domestic debt securities for the financing of its fiscal deficit and repayment of debt maturities. In fact, the Government retired/repaid a portion of Treasury Bills amounting to Rs1.5 trillion which led to a reduction of short-term maturities in-line with the government’s commitment to reduce its Gross Financing Needs.

As per the documents the government repaid Rs569 billion against SBP debt. Cumulative debt retirement against SBP debt stood at Rs2.3 trillion from July 2019 to March 2022.
The Government successfully issued Shariah Compliant Sukuk instruments amounting to around Rs1.1 trillion, in line with the target specified in the Medium Term Debt Management Strategy of Pakistan (2019/20 – 2022/23), to increase the share of Shariah-compliant securities within domestic debt stock; Debt from multilateral and bilateral sources cumulatively constituted around 79 percent of the external public debt portfolio at end-March 2022.

A set of reforms initiated by the Government to improve the economy has brought strong support from multilateral development partners. This is expected to strengthen confidence and catalyze additional support from development partners in the coming years which will also help in reducing the pressure on domestic sources. Within external debt, inflows from multilateral and bilateral development partners remained major sources of funding.

In addition, as per the survey Pakistan raised $1 billion in July 2021 through multi-tranche tap issuance of 5, 10 and 30-year Eurobonds. These bonds were issued at a premium. In January 2022, the government raised $1 billion through the issuance of International Sukuk under the ‘Trust Certificate Issuance Program’. This was the first time that the government issued an International Sukuk with 7 Year maturity and at a market-clearing price i.e., zero issuance premium.

Furthermore the government repaid $ 1 billion against maturing International Sukuks in October 2021. Besides, it utilized the IMF allocated SDR equivalent to Rs475 billion to support its budgetary operations.

Interestingly the total interest servicing/payment during the nine month period was recorded at Rs2,118 billion against its annual budget estimate of Rs3,060 billion. Out of this total, domestic interest payments were Rs1,897 billion and constituted around 90 percent of total interest servicing during the first nine months of the current fiscal, which is mainly attributable to a higher volume of domestic debt in the total public debt portfolio.