Pakistan government has planned the repayment of $6.5 billion external public debt in the next 15 months beginning February this year until June 2018, reported a national daily. The payments exclude the interest to be paid on the principal amount,informed the ministry of finance. This repayment will take the total official debt repayments during the five-year tenure of the PML-N government to a striking $21 billion.
The Ministry of Finance shared these staggering figures with the Senate Standing Committee on Finance and Revenue on Tuesday. Federal Secretary Finance Tariq Bajwa informed that there are no issues with the repayment of the debt.
Responding to a question about the possibility of floating yet another international bond, Bajwa said that the government would inform the committee about the issue once a decision has been reached in the regard. The $6.5 billion repayments are only on account of the government debt and do not include publicly guaranteed debt and the private sector external debt. From June 2013 to January 2017, the PML-N government repaid $14.6 billion to external creditors. In addition to that, it has already paid over $3.1 billion on account of interest on the stock of roughly $60 billion external public debt, according to the Debt Office of the Finance Ministry.
During the ruling tenure of PML-N government beginning June 2013 and its completion in June next year, it has been reliant on heavy and expensive external debt borrowings after it failed to increase exports and attract foreign direct investment.
The government has so far borrowed almost $5 billion by floating international bonds and contracting short-term commercial loans with foreign commercial banks. In addition to that, it has taken heavy loans from multilateral creditors.
The ministry said Pakistan will return $858 million to foreign commercial banks in the next 15 months, taking the figure to $1.84 billion since June 2014. The country will also repay $750 million next month on account of dollar denominated bond, which will take the total bonds repayment figure to $1.25 billion.
Similarly, roughly $3 billion will be repaid to multilateral creditors between March this year to June 2018. The total repayments to the multilateral creditors will increase to $9.3 billion during the five-year PML-N term. Pakistan will repay $1.8 billion external debt to bilateral countries in the next 15 months, taking the total repayments in five years to $4.2 billion. It will also return $42 million to IMF that will bring the total repayment to the global lender to $4.53 billion.
An official of the State Bank of Pakistan (SBP) informed the standing committee that the external debt was increasing due to contraction in growth of exports and slight decline in foreign remittances.
He claimed that the overall trend in the financial account was positive during the current fiscal year 2016-17 due to positive impact of the China-Pakistan Economic Corridor (CPEC) related investment. However, he failed to answer a question about the ratio of equity and debt of the CPEC investment.
The official said the CPEC transactions are settled outside Pakistan and the SBP was seeking details from the Chinese companies.
