Pakistan’s debt and liabilities rose to nearly Rs31 trillion at the end of September 2018 with an addition of Rs 984 billion in just three months.

According to the statistics issued by the State Bank of Pakistan (SBP) showed that the increase comes amid concerns over a rapid rise in the debt burden in coming months owing to currency depreciation and interest rate hike.

The statistics revealed that by the end of first quarter of the current fiscal year, the country’s total debt and liabilities soared to Rs30.9 trillion. Within a span of just three months, there was an increase of Rs984 billion, or 3.3%, in the overall debt.

Of the Rs30.9 trillion, the gross public debt, which is the direct responsibility of the government, stood at Rs25.8 trillion.

There was an increase of Rs839 billion in the gross public debt in three months, which was far higher than the overall budget deficit of Rs542 billion for the period.

One of the key reasons behind the higher debt was the increase in interest rate and devaluation of the rupee during July-September 2018.

A single rupee devaluation adds Rs97 billion to the public debt. Similarly, a 1% increase in interest rate increases the cost of debt servicing by roughly Rs180 billion. This ultimately increases borrowing requirements of the finance ministry.

Further, the total debt and liabilities also include the public sector enterprises’ (PSEs) debt, non-governmental external debt and inter-company external debt from direct investors abroad. Excluding liabilities, the country’s total debt swelled to Rs29.4 trillion.

The government’s domestic debt surged to Rs 16.9 trillion with an addition of Rs507 billion in first three months of the current fiscal year.

The government’s external debt increased to a record Rs8.1 trillion by the end of September, a net addition of Rs327 billion in three months. The total external debt and liabilities surged to Rs12 trillion on the back of currency devaluation. The non-government external debt has also crossed Rs2 trillion.

Moreover, total liabilities, which are indirectly the responsibility of the finance ministry, slightly decreased to Rs1.42 trillion by the end of September. Domestic liabilities dropped from Rs820 billion to Rs809 billion.

External liabilities decreased from Rs622 billion to Rs620 in the three months. Owing to a massive increase in the debt stock, the country’s interest payments have increased significantly.

The devaluation of the currency has also significantly increased the cost of external debt servicing.