Toeing the historic line of borrowing, Pakistan’s External Debt has piled on in last year, going from $ 75.762 billion in September, 2016 to $85.052 billion in just 12 months; an increase of 12.26%.
78 percent of the entire debt can be attributed to Public External Debt, the combination of Government’s Long Term and Short Term External Debt ($ 57.197 billion +8.58% YoY), IMF loans to Central Bank ($ 6.209 billion), and Foreign Exchange Liabilities ($ 3.606 billion).
Whereas, the rest of the amount has been a result of Government borrowing from Public Sector Enterprises, Banks, and Private Sector. Total Debt of PSEs, Banks and Private Sector amount to a sum of $ 14.702 billion.
“Pakistan’s External Debt has been rising by an average of $ 2.3 billion each quarter”
Predictably, short term Bank Borrowing has almost doubled during the year with total Short Term Public & Private Sector borrowings amounting to a total sum of 1.2 billion. Private Sector holds a major piece in the short-term Bank Borrowing, around $ 3.535 billion. The emerging trend in domestic borrowing has hinted at a strong potential for a case of raising interest rates in March next year.
With the depreciation in Rupee, and inflationary targets to be achieved with a wave of populous uproar anticipated in the coming months as Elections near, the State Bank will be considering a rate hike in its next meeting or the one after that. SPB has almost rejected all of the long term borrowing commitments in the recent months as banks force/anticipate a rate hike in the coming months.
“Rupee devaluation is set to hit the economy with an additional cost of Rs. 436 billion for debt servicing!”
The Rupee depreciation is expected to cost the economy immensely as Pakistan relies mainly on its imports to meet her fuel demands, with a rise in the international oil prices the prices for commodities are set to see a substantial incline in the coming months.
