Pakistan’s Foreign Debt, Liabilities Continue To Mount

Pakistan’s foreign debt and liabilities have mounted by USD 3 billion or 2.6 per cent during the six months period ended in December last year, the central bank’s data showed earlier this week.

According to The News, till December, external debt and liabilities of the country totalled USD 115.7 billion compared to USD 112.7 billion till end of June. The total external debt and liabilities were USD 110.7 billion till December 2019, according to the State Bank of Pakistan (SBP).

The external debt and liabilities (EDL) had been increasing sharply even before the start of the coronavirus pandemic due to falling exports, sharp depreciation of exchange rate, tight monetary policy and a decline in non-debt creating inflows, said economist Ashfaque Khan.

“However, COVID-19 has further intensified the country’s debt situation,” said Khan as quoted by The News. “When Pakistan is in the IMF’s [International Monetary Fund] program, the debt accumulates rapidly.”

Khan, the principal and dean at the NUST School of Social Sciences, said external debt and liabilities are expected to reach $120 billion by the end of this fiscal year.

The Pakistani outlet further reported that the State Bank’s data further showed that an expansion in the EDL occurred in public as well as private sectors. A major increase in the foreign debt came from the disbursements from multilateral donors and bilateral creditors.

It was further reported that the public external debt amounted to USD 90.5 billion as of December 31, last year compared with USD 87.8 billion till end-June. This was recorded at USD 87.6 billion till December-end of 2019.

The News reported that the government’s external debt rose to USD 74.8 billion in July-December FY2021 from USD 70.3 billion a year earlier. Long-term foreign debt stood at USD 73.9 billion at December-end, up from USD 68.7 billion till June-end. It amounted to USD 68.1 billion a year earlier.

Pakistan secured a debt relief of USD 1.7 billion from the G-20 countries, together with the Paris Club creditors under the debt service suspension initiative, announced to provide fiscal space to stressed economies hurt by the Covid-19 and lockdown. (ANI)