Government to add Rs 14.5 tln in public debt in next five years

October 4, 2019 (MLN): The government on Thursday, projected Pakistan’s debt figures for the next five years as per which Pakistan’s total debt is expected to rise by 47% to Rs 45.57 trillion from Rs 31 trillion recorded at the end of FY19.

This means that in its five-year tenure, the government is projected to add Rs 14.5 trillion in Pakistan total debt figures which will be 66.5 percent of the Gross Domestic Product (GDP).  This suggests that country’s total debt would keep gradually increasing every year in absolute term but would decline as a percentage of GDP which currently stands at 80.4 percent despite massive increase in country’s debt stock.

This steady reduction in debt to GDP ratio is mainly on the back of expansion in the size of the economy which is expected to improve by 78% to Rs 68.5 trillion from existing Rs 38.5 trillion, as per public debt management plan for FY20-24 by Ministry of Finance.

According to the projected figures, in FY20, total public debt is expected to soar by 14 percent (Rs 4.4 trillion) to Rs 35.28 trillion. Out of this, the increase of Rs 3.2 trillion is projected because of the budget deficit and the remaining Rs1.1 trillion is because of currency devaluation.

Domestic debt is expected to rise by 30% to Rs 26.8 trillion as compared Rs 20.57 trillion in FY19. Debt in the form of T-bills is expected to go down by 6 percent whereas, PIBs and NSS is expected to rise by 53% and 16% respectively by the end of the five-year term of the PTI government.

Likewise, on external front, the debt is expected to mount by 80 percent in next five years to Rs 18.77 trillion from Rs 10.4 trillion in FY19. Within this, the debt payments on commercial loans is expected to go down by 34 percent, while payments to multilateral and bilateral loans is projected to surge by 92% to settle at Rs 14.5 trillion, indicating an addition of Rs 6.97 trillion to country’s total external debt.   

Despite gradual reduction in country’s debt to GDP ratio, the above estimated figures show that by the end of the current government tenure, Pakistan’s debt position will remain unsustainable.

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