Pakistan’s external debt and liabilities have touched a record-shattering figure of $91.8 billion at the end of March. The current government’s tenure saw an increase of 50% or $31 billion in the past 5 years. The amount stood at $91 billion last month i.e. February 2018 based on the data released by the State Bank of Pakistan.
Out of the total $91.8 billion the government’s public debt, including the foreign exchange liabilities, reached $76 billion. In 2013, before the current government took over, public debt stood at $53.4 billion.
Some More Records
The current government has, so far, borrowed $42.6 billion breaking all records since the country’s inception in 1947. International Monetary Fund’s (IMF) report says that Pakistan’s gross external debt in terms of exports will deteriorate to 316% this year in June. The figure was 193.2% back in 2013 before the PML-N government took over.
During the past 4 years and 9 months, the country’s gross external financing needs have soared to $24 billion from 2013’s $17 billion. At this rate, the country will fail to sustain itself without further loans from IMF.
Most of the Pakistani governments, including the current one, have failed to develop a non-debt cash inflow system and have relied heavily on loans instead. Two of the biggest contributing factors to the deteriorating economy are sovereign bonds and commercial loans at expensive rates.
To put it in perspective as to how deep Pakistan is dependent on loans for its survival, consider the amount located in the budget for debt repayments. Pakistan recently allocated 30.7% or Rs 1.62 trillion for debt servicing costs, making it the single biggest expenditure in the budget. This amount is greater than any other allocation, be it defense, government affairs spending, education, or health etc.
The country also has the fastest depleting foreign currency reserves in Asia. Currently, the Forex reserves stand at $11.16 billion and these include loans of $6.13 billion that the SBP took from domestic banks.
Pakistan recently borrowed $1 billion from China as well to stabilize the foreign currency reserves. However, the current Forex figures show that the amount has already been consumed.