Pakistan’s total debt and liabilities have reached a new record of nearly Rs81 trillion, marking a significant increase over the past year as the country seeks new financing sources to meet its growing debt servicing needs amid junk credit ratings.
This debt is now equal to three-fourths of the national economy and is about 15% higher than the statutory limit defined in the Fiscal Responsibility and Debt Limitation Act.
As per reports, despite commitments to the IMF and the World Bank, the Debt Management Office is under capacity, and the Ministry of Finance appears reluctant to reinforce it.
According to the State Bank of Pakistan (SBP), the nation’s total debt and liabilities surged by Rs 8.4 trillion by the end of March compared to the previous year, with liabilities amounting to Rs 4.4 trillion.
The debt and liabilities increased at a rate of 12%, averaging Rs31 billion per day over the past year.
Although the pace of debt accumulation has slowed due to a stable exchange rate and the absence of major foreign funding despite the IMF program, concerns remain.
As of March, the gross public debt under the finance ministry’s direct responsibility totalled Rs67.5 trillion. Last fiscal year’s federal budget deficit soared to a record Rs6.7 trillion due to expansionary fiscal policies.
Public Sector Enterprises’ debt and liabilities reached Rs3.8 trillion by March, mainly to finance their deficits.
Pakistan’s external debt and liabilities climbed to $130.4 billion by the end of March, an increase of $3 billion in the last year. Debt from the IMF reached Rs2.2 trillion by the end of March, with the IMF currently assessing conditions before deciding on a new bailout package.
However, the external debt remained stabilised at Rs33 trillion over the past year, aided by the rupee’s appreciation against the US dollar and the lack of fresh foreign financing.
The SBP had to purchase around $6 billion from the open market to stabilise reserves, keeping external debt around $130 billion.
The federal government’s total domestic debt increased to Rs43.4 trillion, rising by Rs4.6 trillion or 12% in the past year. The country spent Rs5.8 trillion on servicing the total debt, marking a 53% increase from the previous year.
