Pakistan by far the largest borrower with an external debt of $73 billion: World Bank

July 20, 2020 (MLN): The latest ‘Debt Report 2020’ by the World Bank has said that Pakistan is by far the largest borrower within the group of DSSI eligible countries, with an external debt stock of $73 billion at end 2018.

According to the report, nearly 85 percent of this amount is owed to official creditors with nearly half accounted for by multilateral creditors.

Regarding the DSSI eligible countries, the report pointed out that their external debt stock is highly concentrated. The seven largest borrowers in this group accounted for 52 percent of the end 2018 debt stock and the 15 largest borrowers for over 70 percent.

Furthermore, the report suggested that the bond issuance in international capital markets has also become an important source of financing for some DSSI-eligible countries. Over the past decade (2010-2019) 30 countries in this group, issued bonds in the international capital market. The combined issuance totaled $87 billion of which the majority, 85 percent, were issued by sovereign governments and public sector entities.

Issuance by the private sector was confined to 6 countries i.e. Cambodia, Ghana, the Republic of Lao, Nigeria, Mongolia, and Pakistan, with private entities in Nigeria as the most significant issuers. In terms of regional distribution countries in Sub-Saharan Africa were the most active players in international bond markets with a total issuance of $66 billion compared to $21 billion by DSSI-eligible countries in other regions, notably East Asia and the Pacific and South Asia.

The COVID-19 Debt Service Suspension Initiative (DSSI) endorsed by the G-20 and the Paris Club on April 15, 20201 responded to calls by the World Bank and the IMF (March 25, 2020) on official bilateral creditors to provide a time-bound suspension on debt service to countries that request forbearance.

The DSSI applies to all IDA eligible and UN Least Developed Countries with the exception of countries with protracted arrears to official and private creditors. Under DSSI, bilateral official creditors from G-20 countries agree to reprofile principal and interest payments falling due between May 1 and December 31, 2020 for countries that request a suspension of debt service and are benefiting from or have requested IMF financing.

World Bank/IMF