August 30, 2021 (MLN): Pakistan’s External Debt and Liabilities reached nearly $122.16 billion during April-June FY21, an increase of $9.18bn or 8% YoY, the Central Bank data showed on Monday.

However, as a percent of GDP, Pakistan’s External debt and Liabilities declined from 45.7% of GDP in 4QFY20 to 40.3% of GDP in 4QFY21.

On a sequential basis, the country’s external debt and liabilities jumped by $5.89bn or 5% QoQ during Q4 as the amount was $116.3bn at end of March 2021.

During the PTI government, foreign debt rose by $27bn, while it was $95bn when PTI government came into power. During PML(N) tenure, foreign debt soared by $34bn as it was $61bn when it came into power.

According to the latest data issued by the State Bank of Pakistan (SBP), 78% of the entire debt can be attributed to Public External Debt, the combination of the Government’s Long Term and Short-Term External Debt, IMF loans to Central Bank, and Foreign Exchange Liabilities.  The Government external debt which includes both long term and short-term external debt stood at $79.03bn during 4QFY21, up by 12% YoY and 7% QoQ, IMF loans to Central Bank and Federal government standing at $3.94bn and $3.43bn respectively, while Foreign exchange liabilities outstanding recorded at $8.76bn during the period under review.

Within the public external debt, the Long-term debt stood at $78.174bn, up by 14% compared to 4QFY20 and 7% compared to the previous quarter. Short-term debt (less than one year) decreased by 44% YoY to $858mn compared to the figure recorded at the end of June 2020. While it was increased by 3% from $833mn at the end of March 2021.

The rest of the amount has been a result of Government borrowing from Public Sector Enterprises, Banks, and the Private Sector. 

Notably, short-term Bank Borrowing reached $2.64bn during Q4 of FY21, showing an increase of 15% QoQ while it declined by 4% compared to Q4 of FY20.

 Long-term Bank borrowing was recorded at $4mn during 4QFY21, depicting a decline of 75% YoY and 64% QoQ.

Outstanding external debt of Public sector enterprises (PSEs) during 4QFY21 stood at $6.74bn, the figure was 30% higher when it compared with 4QFY20 and 9% higher when it compared with the previous quarter.

Private sector external debt, which attributed to 10% of the total external debt amounted to $10.8bn by the end of 4QFY21, depicting a slight decline of 1% YoY and 2% QoQ.

Additional data posted showed the GDP (Current Market Price) to have increased from $247.1bn in April-June FY20 to $303.28bn, showing a notable jump of 23% YoY. However, compared with the previous quarter, GDP at the current market price shrank by 3% from $312.6bn.

Official liquid reserves increased from $12.5bn in 4QFY20 to $17.42bn, marking an increase of 39% YoY. On a sequential basis, it was up by 28% from $13.6bn in 3QFY21.

Debt Servicing

Pakistan’s total external debt servicing (principal and interest) by the government reached a total of $13.42bn at the end of FY21, down by 8% compared to FY20 and increased by 16% YoY compared to FY19.

In the preceding year or FY20 principal and interest payments stood around $14.578bn while in FY19 principal and interest payments stood around $11.589bn.

This indicates that in 3-years, the government has paid a whopping $39.591bn as principal and interest. Whereas, in five years tenure of PML (N) principal and interest amount stood at $33.363 bn, while in five years tenure of PPP government, principal and interest amount paid was $24.306 bn

As per the data released by the State Bank of Pakistan (SBP) today, Principal Amount payments during FY21 totaled $11.18bn, a major chunk of which ($9.9bn) comes from the Public debt particularly concentrated under the Government Debt head. Interest payable on the principal of public debt totaled $1.68bn. While the interest paid on the principal of total debt totaled at $2.24bn. Furthermore, during FY21, Pakistan paid $5.86bn and $1.08bn principal amount on government debt and on IMF loans respectively. Whereas $1.3bn and $150mn were paid as interest payments on the government’s loan and on loans from IMF.

Meanwhile, it is pertinent to mention that within government external debt, the major chunk of $910mn (out of $3.4bn) was paid on Commercial loans and Credit followed by $1.55bn on multilateral loans as the principal amount.

Moreover, to meet Foreign Exchange Liabilities, the government paid the sum of $3.22bn, of which $3bn paid as principal and $225mn retired as interest payments.

Debt servicing of the Public Sectors Enterprises (PSEs) during FY21 reached $263mn, down by 55% YoY. Under this head, the country paid $171mn as principal payment and $92mn paid as interest.

Furthermore, the total debt servicing of the private sector (non-guaranteed debt) declined 25% YoY to $1.5nn in FY21, of which $1.07bn was retired as principal amount while $443mn were paid as Interest.

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