ISLAMABAD  -  Pakistan had paid $11.588 billion as external debt servicing (principal and interest payment) in last fiscal year 2018-19, which had put pressure on the country’s foreign exchange reserves.

The amount of external debt servicing is continuously increasing as it had gone up by over 54 percent in last one year. Pakistan’s external debt servicing was only $7.495 billion in preceding year 2017-18. The break-up of $11.588 billion showed that Pakistan had repaid $8.654 billion as principal amount and $2.933 billion as interest payment during the last fiscal year, showed the latest data of State Bank of Pakistan (SBP).

The massive external debt servicing had compelled the government to take foreign borrowing in previous financial year. The government in overall had taken $16.3 billion loans from foreign sources during previous year. Pakistan had borrowed $10.8 billion from multilateral and bilateral sources during previous year to repay previous loans and financing current account deficit. Meanwhile, Saudi Arabia had given $3 billion, UAE $2 billion and Qatar $500 million. Qatar would give further $2.5 billion to Pakistan, as it had committed to place $3 billion in SBP’s account on the request of government of Pakistan.

The SBP’s data showed that Pakistan had paid $9.645 billion as public debt, which included government debt, from IMF, and foreign exchange liabilities. Similarly, it had paid $354 million against loans of public sector enterprises (PSEs). Meanwhile, the government had paid $1.514 billion as external debt servicing against the private sector.

The debt servicing of the country is rapidly increasing with the passage of the time, which is pushing pressure on the country’s external sector. The reserves are tumbling despite government is receiving massive loans. The SBP’s reserves decreased by US$26 million to US$8,238.7 million during the week ending 17 August 2019, due to external debt servicing and other official payments.

The successive governments in Pakistan had massively borrowed from external as well internal sources to meet the twin deficits including budget and current account. The incumbent PTI government, which criticized previous governments for borrowing, had also made significant borrowing since coming into power. Pakistan’s total debt and liabilities have enhanced by Rs11 trillion just in first year of the incumbent government and stood at Rs40 trillion. The data showed that the PML-N had increased Rs15 trillion into public debt and liabilities in five years, while the PTI added up total debt and liabilities by Rs11 trillion just in one year. The public debt and liabilities stood at Rs29 trillion on June 2018 which have now peaked to Rs40 trillion on June 30, 2019. The latest data released by the SBP showed that foreign loan stood at $106 billion till last fiscal year.