Dawn author Shahid Iqbal highlights that Pakistan’s external debt servicing has risen by 70% in the first half of the fiscal year 2022-23, according to the latest data from the State Bank of Pakistan (SBP), further worsening the country’s dollar shortage.
The data reveals that Pakistan paid $10.21 billion in external debt servicing in the first six months of the current fiscal year, compared to $6 billion paid in the same period last year. Furthermore, the country had to pay an unusually high amount of $6.77 billion in external debt servicing between October and December 2022.
The debt servicing in the second quarter of 2022-23 was almost double the sum paid in the preceding quarter of the same fiscal year, standing at $3.45 billion.
As a result of such high levels of debt servicing in the first half of the current fiscal year, the SBP’s foreign exchange reserves have drastically reduced, currently hovering around $3.2 billion. Despite long negotiations with the International Monetary Fund (IMF) and other global institutions, inflows could not be unlocked.
The negotiating team led by the finance minister did not issue an encouraging statement after the 10-day talks, and analysts believe that Pakistan will have to wait further for the IMF loan tranche of $1.1 billion, as certain preconditions must be met before the release of dollars.
The government and the SBP have reportedly issued misleading statements on the issue of foreign exchange inflows, repeatedly claiming that most of the debt for the current fiscal year had been arranged. However, the reality is that the country’s foreign exchange crisis had intensified to the point that default was imminent without support from the IMF and friendly countries.
Recently, the SBP finally uncapped the exchange rate, and the dollar rate appreciated from Rs228 to Rs276. However, the rupee has started gaining strength against the greenback, reaching a closing price of Rs 262.82 on Friday, as per the SBP’s report.
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