ISLAMABAD - As the PML-N government is heavily borrowing from the national as well international financial sources, Pakistan's overall public debt has reached Rs 16,936 billion by the end-March 2015.
"Public debt recorded an increase of Rs.940 billion during first nine months of the current fiscal year as compared with Rs.1,272 billion during the same period last year. The primary source of increase in public debt was in the form of domestic debt that positioned at Rs.11,932 billion representing an increase of Rs.1,012 billion, whereas, external debt positioned at Rs. 5,004 billion representing a decrease of Rs.72 billion as compared to end June 2014," stated the Economic Survey 2014-2015 launched on Thursday.
According to the survey, the external debt declined despite net external inflows, which is mainly attributed to huge translational gain of around US$ 4.3 billion on account of appreciation of US Dollar against other major currencies.
A rising debt burden has implications for the economy in the shape of a greater amount of resource allocation towards debt servicing in the future. During July-March 2014-15, public debt servicing was recorded at Rs.1,193 billion against the annual budgeted estimate of Rs.1,686 billion. Public debt servicing consumed nearly 44.5 percent of total revenues during first nine months of current fiscal year against a ratio of 47 percent during the same period last year. Ideally, this ratio should be below 30 percent to allow government to allocate more resources towards social and poverty related expenditures.
Domestic interest payments constituted around 76 percent of total debt servicing, which is due to increasing volume of domestic debt in overall public debt portfolio. Domestic interest payments were recorded at Rs.911 billion during first nine months of current fiscal year as compared with Rs.855 billion during the same period last year. Further analysis of domestic debt servicing revealed that large portion was paid against PIBs (Rs.384 billion), Market Related Treasury Bills (Rs.227 billion), T-Bills (Rs.93 billion) etc.
Meanwhile, Pakistan's External Debt and Liabilities (EDL) include all foreign currency debt recorded at US$ 62.6 billion as at end March 2015 out of which external public debt was US$ 49.1 billion. Public external debt witnessed a decline of US$ 2.3 billion during first nine months of current fiscal year despite net positive disbursements. This reduction in external debt was mainly contributed by translational gain on account of appreciation of US Dollar against other major currencies by US$ 4.3billion.
During first nine months of 2014-15, disbursements including loans and grants stood at US$ 4,001 million compared with US$ 2,301 million during the same period last year.
Pakistan also received US$ 2,106 million from the IMF. Importantly, net inflows from the IMF stood at US$ 1,041 million during first nine months of current fiscal year compared with net outflow of US$ 861 million during the same period last year. The pace of external inflows is likely to continue in future as the government has signed a number of fresh financing agreements with international development partners.