ISLAMABAD – The total public and publicly guaranteed debt of Pakistan stood at Rs55.801 trillion in December 2022, seven percent higher compared to end-FY 2022, revealed a report issued by the Ministry of Finance.
“The rise is attributed to the increase in the interest burden due to the high-interest rate environment and the 11 percent depreciation of Pakistani rupee against the US dollar experienced in the first six months of FY 2023. The primary surplus realized during first half of FY 2023 partially offsets this increase,” the report read.
Domestic debt accounted for 62.8 percent of total public debt, with the remaining being external debt, it said. On the other hand, 37.2 percent of total public debt is external debt, which is owned by multilateral development partners, bilateral creditors, and commercial sources.
The report said that the government was exerting all possible efforts to secure external financing. During the first half of FY 2023, successful completion of 7th and 8th review under the IMF Extended Fund Facility (EFF) led to the disbursement of $1466 million. The government also successfully rolled over (China SAFE deposit of $1,000 million and Saudi Time deposit of $3,000 million).
Furthermore, the government received $3,298 million from multilateral agencies. On the other hand, the government repaid $2,722 million and $1,000 million on international commercial loans and international Sukuk maturity, respectively.
In FY 2022, the total public and publicly guaranteed debt-to-GDP ratio increased from 75.8 to 78.0. This increase is attributed to the depreciation of Pakistan’s Rupee and the primary deficit, with domestic debt being the main source of financing the fiscal deficit. The increase was partially compensated by the combined effect of negative real interest rates and GDP growth. The domestic debt-to-GDP ratio fell from 47.1 to 46.4 percent in FY 2022. The external debt-to-GDP ratio grew from 34.1 to 36.9 percent, driven by the depreciation of Pakistan’s Rupee.
The ministry has projected the real GDP growth at o.8 percent in FY 2023 on account of catastrophic floods, tight monetary stance, fiscal consolidation, and non-conducive global economic environment. Over the medium term, growth rate recovery is expected, achieving 5.5 percent in FY 2026.
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