Pakistan’s total public debt stood at Rs. 28.607 trillion at the end of March 2019, recording an increase of Rs 3.655 trillion during first nine months of the current fiscal year (July-March) 2018-19, revealed the Economic Survey 2018-19 released on Monday.
Total public debt as a percentage of GDP stood at 72.1 percent while the total debt of the government was recorded at 66.5 percent at end June 2018. The total public debt to GDP ratio has increased further and was recorded at 74.2 percent of GDP at the end of March 2019.
Apart from a higher fiscal deficit, depreciation of Pak Rupee against the US Dollar has contributed to this increase during the first nine months of the current fiscal year.
The survey noted that devaluation of Pak Rupee against international currencies can increase the value of external public debt portfolio when converted into Pak Rupee for reporting purposes. It is evident from the fact that an increase in external public debt contributed Rs. 1,900 billion to the public debt during the first nine months of the ongoing fiscal year, while government borrowing for the financing of fiscal deficit from external sources was Rs. 524 billion during the said period. This differential was mainly on account of depreciation of Pak Rupee against US Dollar.
The domestic debt registered an increase of Rs. 1,754 billion while government borrowing for the financing of fiscal deficit from domestic sources was Rs. 1,398 billion. This differential is mainly attributed to an increase in credit balances of the government with the banking system.
The Survey further noted that the government’s debt was Rs. 26.368 trillion at end-March, recording an increase of Rs. 3.344 trillion during the first nine months of the current fiscal year 2018-19.
Further External Debt and Liability (EDL) stock during first nine months of the current fiscal year, recorded an increase of $10.6 billion to stand at $ 105.8 billion at end-March 2019 out of which public debt was $74.2 billion. External public debt increased by around $3.9 billion during the first nine months of the current fiscal year compared with an increase of $6.7 billion witnessed during the same period last year.
Domestic debt stock was recorded at Rs. 18,171 billion at end March 2019. During the first nine months of the current fiscal year, the government relied mainly on domestic sources to finance its fiscal deficit. Consequently, domestic debt witnessed an increase of Rs 1,754 billion while government borrowing from domestic sources for financing fiscal deficit was Rs. 1,398 billion. This differential is mainly attributed to increasing government credit balances with the banking system.
Most of the increase in domestic debt came from short term floating debt while net mobilization from permanent debt and unfunded debt remained limited during the first nine months of the current fiscal year. Cumulatively, the government mostly borrowed from State Bank of Pakistan (SBP) and retired a portion of its debt to commercial banks.
Public debt servicing was recorded at Rs. 1,975 billion during the first nine months of the current fiscal year against the annual budgeted estimate of Rs. 2,396 billion. Domestic interest payments constituted around 65 percent of total debt servicing due to the higher volume of domestic debt in the total public debt portfolio.
Domestic interest payments were recorded at Rs 1,277 billion during first nine months of the current fiscal year primarily driven by payments made against Market Related Treasury Bills (Rs 299 billion), Treasury Bills (Rs 290 billion), National Savings Schemes (Rs 272 billion) and Pakistan Investment Bonds (Rs 268 billion).
The permanent debt was recorded at Rs 4,804 billion at end March 2019, representing an increase of Rs 144 billion during the first nine months of the ongoing fiscal year. Net mobilization from PIBs stood at Rs 183 billion compared with the retirement of Rs 1,068 billion during the same period last year. The government also mobilized Rs 178 billion from the auction of outright purchase of GIS on deferred payment (Bai Muajjal) basis.
Floating debt formed the largest part of the domestic debt portfolio at end March 2019, recorded at Rs 10,271 billion or around 57 percent of the total domestic debt portfolio. Floating debt recorded an increase of Rs 1,382 billion during the first nine months of the current fiscal year, thereby, around 79 percent of the total increase in domestic debt portfolio was on account of mobilization from floating debt.
Gross external public debt disbursements were recorded at $8.262 billion during nine months of the current fiscal year. Disbursements from bilateral sources remained the main contributor in gross external public debt disbursements with a share of 48 percent or US$ 4,004 million. Out of this total, disbursements from China was US$ 3,885 million or 97 percent of total disbursement from bilateral sources
Foreign commercial loans contributed US$ 3,108 million in total disbursements. These commercial loans were primarily obtained for the balance of payment support. The government mobilized US$ 1,150 million from multilateral sources largely for energy and infrastructure projects.
During the first nine months of the current fiscal year, servicing of external public debt was recorded at US$ 5,608 million. Segregation of this aggregate number shows repayment of US$ 4,139 million towards maturing external public debt stock while interest payments were US$ 1,470 million.