Pakistan’s total public debt was recorded at Rs. 59,247 billion at the end-March 2023, registering an increase of Rs. 10,005 billion during the first nine months of the current fiscal year.
The Economic Advisor’s Wing of the Finance Division noted in the Economic Survey 2022-23 that domestic debt was recorded at Rs. 35,076 billion while external public debt was recorded at Rs. 24,171 billion or US$ 85.2 billion.
External Public Debt
External public debt was recorded at US$ 85.2 billion at end-March 2023, revealing a decrease of around US$ 3.7 billion during the first nine months of the current fiscal year.
During the period, the debt stock of multilateral sources increased by US$ 2.3 billion. The main gross inflows included US$ 1.1 billion from the IMF program, US$ 1.5 billion from ADB’s BRACE program, US$ 1.1 billion from World Bank, and US$ 0.5 billion from AIIB.
Overall, multilateral loans are mostly contracted on concessional terms. Bilateral debt stock decreased by US$ 0.9 billion, while the debt stock of commercial loans registered a net decrease of around US$ 3.7 billion. The gross repayment to foreign commercial banks was US$ 4.5 billion, out of which, US$ 0.7 billion was refinanced by China Development Bank (CDB).
The federal government repaid US$ 1.0 billion of international Sukuk in December 2022. Whereas, the stock of Pakistan Banao Certificates, Naya Pakistan Certificates, and non-resident investment in Government securities (T-bills & PIBs) cumulatively decreased by US$ 0.4 billion.
Gross external loan disbursements were recorded at US$ 7,032 million during the first nine months of FY23. On the other hand, external public debt repayments were recorded at US$ 11,400 million during the same period, up from $8,139 million in 9MFY22.
This increase in repayments is primarily due to
- resumption of debt repayment to bilateral creditors, which were deferred under the Debt Service Suspension Initiative (DSSI)
- US$ 1,000 million International Sukuk maturity in Dec 2022
- higher repayment of commercial loans i.e., bank loans and other short-term credits
Interest payments were recorded at US$ 2,119 million during the first nine months of FY2022 as compared to US$ 1,297 million during the same period of the preceding year. The main factors which increased the external interest servicing during the ongoing fiscal year were
- resumption of interest payments to bilateral creditors in the third quarter of FY2022, which were deferred under DSSI
- increase in global interest rates, leading to the resetting of floating rate external debt at a higher rate
- higher interest servicing against commercial loan portfolios and Eurobonds
Other Factors Impacting External Debt Movement
In addition to net external inflows, the following factors influenced the movement in external public debt stock during the first nine months of the current fiscal year:
- In US Dollar terms, revaluation losses owing to the depreciation of the US Dollar against other international currencies increased the external public debt stock by around US$ 470 million.
- The above-mentioned translational loss on account of the depreciation of the US Dollar against other international currencies added further to the depreciation of the Pak Rupee against the US Dollar by around 39 percent which led to an increase in the Rupee value of external debt by around Rs. 6.8 trillion.
Permanent debt constituted 71 percent of the domestic debt portfolio and was recorded at Rs. 24,885 billion at end-March 2023, representing an increase of Rs. 4,507 billion during the first nine months of the ongoing fiscal year.
Floating debt was recorded at Rs. 6,295 billion or around 18 percent of the total domestic debt portfolio at the end-March 2023. During the first nine months of the ongoing fiscal year, a reduction of Rs. 522 billion was witnessed in the stock of T-bills.
The stock of unfunded debt stood at Rs. 2,998 billion at end-March 2023, constituting around 9 percent of the total domestic debt portfolio.
Unfunded debt recorded a net reduction of Rs. 338 billion during the first nine months of the current fiscal year.
Other components of debt include Naya Pakistan Certificates (Rs. 139 billion), SBP on-lending to the government against IMF Special Drawing Rights (Rs. 475 billion), and loans from banks other than securities (Rs. 284 billion).