ISLAMABAD - Without taking new loan, the country's external debt has surged by more than Rs 300 billion during the last few months due to sharp rupee depreciation against US dollar, as Pakistani rupee is trading at historic low level of over 90 to the US dollar, it has been learnt.
"The country's external debt has increased by Rs 300 billion in just a few months without taking new loan. However, it has surged only due to increase in rate of US dollar by over 5 per cent against the rupee in last few months", said eminent economist and Dean National University of Sciences & Technology (NUST), Dr Ashfaq Hassan Khan while talking to The Nation on Wednesday. The country's external debt is around $ 60 billion. He said that external debt stood at over $60 billion and depreciation of Rs1 was causing Rs60 billion jump in the public debt burden. The recent depreciation of rupee has caused jump in public debt by Rs 300b, he added.
According to market sources, "The rupee was traded at more than 90 to the dollar on Wednesday". The market dealers feared that dollar's value might further surge to over 91 rupees because of increased import payments and a deteriorating economic outlook. There are concerns on the economic front as the country's current account deficit stood at $2.10 billion in July-Nov compared with $589 million in the same period a year earlier.
The deficit is likely to widen further in the coming months because of debt repayments and a lack of external aid.
Pakistan has to start repayment to the IMF likely from February this year and without additional sources of revenue, analysts said, its foreign exchange reserves may come under pressure. The foreign exchange reserves were at around $16.60 billion in December 2011 compared with a record $18.31 billion as of few months back.
Dr Ashfaq Hassan Khan further informed that apart from increasing the external debt, the interest payments would go up that would disturb the budget of the government. Similarly, he said prices of oil would also enhance, as Pakistan imported oil in dollars. So due to increase in dollar value of import bill would also surge, he added.
He was of the view that power tariff could also go up due to the same reason, as furnace oil is also imported in the country. When asked to suggest remedy measures, Dr Ashfaq said that government remained silent spectator in this exercise and it must react to address the issue to control the rupee depreciation against the US dollar.