ISLAMABAD - Pakistan's public debt has surged to Rs19, 168 billion, registering an increase of Rs1,787 billion during first nine months (July-March) of current fiscal year 2015-2016.

The latest Economic Survey 2015-2016 revealed that domestic debt increased by Rs1200 billion, which was taken by the government for financing of fiscal deficit. Similarly, the external debt enhanced by Rs588 billion. Apart from fresh external inflows, revaluation loss on account of depreciation of US dollar against other international currencies as well as depreciation of Pak rupee against US dollar contributed to this increase in debt.

As at end-March 2016, public debt to GDP ratio stood at 64.8 percent, which includes an adverse effect of around 2.3 percent of GDP on account of increase in credit balances of government with SBP/commercial banks and revaluation loss on account of cross currency movements.  Further, lower inflation contributed towards lesser nominal GDP growth in 2015-16, which exerted upward pressure on public debt to GDP ratio.

According to the survey, public debt servicing (interest payment) was recorded at Rs1, 371 billion during July-March (2015-16), against the annual budgeted estimate of Rs1, 686 billion. Public debt servicing consumed nearly 46 percent of total revenues during first nine months of current fiscal year against a ratio of 45 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 73 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 Rs1, 003 billion during first nine months of current fiscal year as compared with Rs.910 billion during the same period last year.

Further analysis of domestic debt servicing revealed that large portion was paid against PIBs (Rs477 billion), National Savings Schemes (Rs.198 billion), T-Bills (Rs.144 billion) and (Market Related Treasury Bills (Rs.126 billion).

Servicing of public external debt increased by $188 million in first nine months of 2015-16 compared to the same period last year and recorded at US$ 3,560 million.

Pakistan's External Debt and Liabilities (EDL), which include all foreign currency debt, contracted by the public and private sector as well as foreign exchange liabilities of SBP, were recorded at $69.6 billion as at end March 2016 out of which external public debt was $55.1 billion. Apart from net external inflows from International Financial Institutions (IFIs) and mobilization of $500 million through issuance of Eurobonds, public external debt witnessed an increase on account of revaluation loss due to depreciation of US dollar against other major currencies.

The economic survey stated that disbursements against external public debt stood at $6,252 million during first nine months of 2015-16. As per details of gross inflows from main creditors during the period, inflows from ADB worth $722 million included $87 million under the Social Protection Development and $394 million for sustainable energy reform program. Out of total inflows of $687 million from IDA, Pakistan received $489 million under the Power Sector Reform Development Policy Credit. Out of the total mobilization of $784 million from IDB, most of the borrowing was done on short term basis under Murabaha arrangement. Government borrowed $1,381 million from commercial lenders. Pakistan mobilized $500 million as proceed of the Eurobond issued in September 2015 and inflows from IMF stood at $1,508 million under Extended Fund Facility (EFF).