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Pakistan’s external debt and liabilities reach 40.5% of GDP during 1HFY21

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February 17, 2021 (MLN): Pakistan’s External Debt and Liabilities ballooned to nearly $115.75 billion at the end of 1HFY21, an addition of $5 billion or 5% in the past six months, reported the State Bank of Pakistan (SBP) on Wednesday.

However, as a percent of GDP, Pakistan’s External debt and Liabilities declined from 41.1% of GDP in 1HFY20 to 40.5% of GDP in 1HFY21.

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 $74.89 billion during 1HFY21, up by 6% YoY, IMF loans to Central Bank and Federal government standing at $4.5 billion and $2.96 billion respectively, while Foreign exchange liabilities outstanding recorded at $8.18 billion during the period under review.

Within the public external debt, the Long-term debt stood at $73.97 billion, up by 9% YoY compared to 1HFY20. Short-term debt (less than one year) decreased by 67% YoY to $915 million compared to the figure recorded at the end of December 2020.

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 declined by 21% YoY by the end of December 2020 to $2.19 billion.

Long-term Bank borrowing recorded at $13 million, while when it compared with 1HFY20, it stood at $21 million, depicting a decline of 38% YoY.

Outstanding external debt of Public sector enterprises (PSEs) during 1HFY21 stood at $5.5 billion, the figure was 46% higher when it compared with 1HFY20.

Private sector external debt, which attributed to 10% of the total external debt amounted to $11.26 billion by the end of Dec 2020, depicting an increase of 3% YoY as in 1HFY20 it totaled at 10.97 billion.

Additional data posted showed the GDP (Current Market Price) to have increased from $269.43 billion in July-Dec FY20 to $285.52 billion, showing a jump of 6% YoY.

Official liquid reserves increased from $11.76 billion in 1HFY20 to $13.55 billion, marking an increase of 15% YoY.

Debt Servicing

Pakistan’s total external debt servicing (principal and interest) by the government reached a total of $3.547 billion at the end of December 2020.

On a sequential basis, the debt servicing cost increased marginally in 2QFY21 as it stood at Rs 3.5 billion during July-Sep FY21.

As per the quarterly data released by the State Bank of Pakistan (SBP) today, Principal Amount payments during Oct-Dec FY21 totaled $2.93 billion, a major chunk of which ($2.53 billion) comes from the Public debt particularly concentrated under the Government Debt head. Interest payable on the principal of public debt totaled $443 million. While the interest paid on the principal of total debt totaled at $617 million.

Furthermore, during the quarter, Pakistan paid $1.23 billion and $303 million principal amount on government debt and on IMF loans respectively. Whereas, $347 million and $40 million 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 $750 million (out of $1.2 billion) was paid on Commercial loans and Credit followed by $319 million on multilateral loans as principal amount.

Moreover, to meet Foreign Exchange Liabilities, the government paid the sum of $1.057 billion, of which $1000 million paid as principal and $57 million retired as interest payments.

Debt servicing of the Public Sectors Enterprises (PSEs) during the quarter reached $39 million, down by 59% QoQ. Under this head, the country paid $25 million as principal payment and $14 million paid as interest.

Furthermore, the total debt servicing of the private sector (non-guaranteed debt) increased 87% QoQ to $521million in which $367 million was retired as principal amount while $154 million were paid as Interest.

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Posted on: 2021-02-17T21:33:00+05:00

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