ISLAMABAD - Pakistan’s public debt has increased to Rs42.745 trillion by December 2021 mainly due to the currency depreciation and interest payment.

According to the latest report of ministry of finance, the country’s public debt was recorded at Rs42.745 trillion by December 2021 as compared to Rs37.465 trillion by the end of December 2020. The breakup of overall public debt showed that domestic debt was recorded at Rs26.747 trillion and external debt at Rs15.998 trillion. Meanwhile, the government’s debt was recorded at 38.377 trillion.

The report showed that country’s public debt has enhanced by Rs2.885 trillion in just six months period (from July 2021 to December 2021). The debt has increased due to interest payment, which stood at Rs1.453 trillion, and currency depreciation that cost Rs1.509 trillion in six months of the current fiscal year.

The government has retired/repaid portion of Treasury Bills amounting to Rs 1.0 trillion which led to reduction of short-term maturities in-line with government’s commitment to reduce its gross financing needs; the government repaid Rs 569 billion against SBP debt. Cumulative debt retirement to SBP stood at Rs 1.7 trillion from July 2019 to December 2021. Within domestic debt, government relied on long-term domestic debt securities for financing of its fiscal deficit and repayment of domestic maturities.

Debt increased due to currency depreciation and interest payment

Meanwhile, within external debt, inflows from multilateral and bilateral development partners remained major sources of funding. In addition, Pakistan re-entered the international capital markets and successfully raised USD 1 billion in July 2021 through multi-tranche tap issuance of 5-, 10- and 30-year Eurobonds. These bonds were issued at premium. Meanwhile, the government had repaid USD 1.0 billion against maturing International Sukuks in October 2021; and government utilized IMF allocated SDR equivalent to Rs 475 billion to support its budgetary operations.

External debt was recorded at $90.6 billion at end-December 2021. Pakistan’s external debt is derived from four key sources, with around 47 percent coming from multilateral loans, 31 percent from bilateral loans, 14 percent from commercial loans and 9 percent from Eurobonds/Sukuk at end December 2021. Although borrowing from commercial sources has relatively increased during the last few years, multilateral and bilateral sources still cumulatively constitute 78 percent of external public debt portfolio as of end December 2021.

The breakup showed of $90.6 billion showed that Pakistan has borrowed $83.9 billion from the government external debt and $6.732 billion from the International Monetary Fund (IMF). In government external debt, the debt of Paris Club stood at $10.146 billion, - multilateral $34.634 billion, other bilateral $17.929 billion, - Euro/Sukuk global bonds $7.8 billion, commercial loans $10.218 billion and Naya Pakistan Certificates $1.414 billion.