Public debt surges by Rs883bn to Rs8,160bn in nine months

ISLAMABAD (The News): Pakistan’s total public debt surged by Rs883 billion during the first nine months (July-March) of the outgoing fiscal year as it went up to Rs8,160 billion in 2009/10 against Rs7,277 billion during the last financial year 2008/09, the Economic Survey said.

Independent analysts say that the rising public debt shows that each person of 173 million population is liable to pay around Rs80,000 in the shape of outstanding debt in 2009/10 against Rs40,000 three years ago.

The total public debt stood at Rs4,570 billion in 2007 when the PPP-led regime took charge of the power. During the last two-and-a-half-year, the public debt surged by Rs3,140 billion by witnessing unprecedented hike to touch Rs8,160 billion by the end of March, it said.

Although, the Economic Survey 2009-10 did not incorporate the debt figures in the shape of publicly guaranteed debt or private sector debt and if all figures, including the loan obtained from the International Monetary Fund (IMF) for balance of payments support is incorporated then the total public debt climbed to touch Rs9 trillion-mark.

The total public debt stood at 55.6 per cent of the GDP by 2009/10, out of which 30.6 per cent of the GDP in the shape of domestic currency debt and 25 per cent is the foreign current debt.

External debt & liabilities: The country’s total external debt and liabilities stood at $53.9 billion by 2009/10, out of which Paris Club owed $14 billion, multilateral $23 billion, bilateral $2.5 billion, Euro Bond-Sukuk $1.6 billion, military debt $0.2 billion and commercial loans worth $0.3 billion.

The IMF owed $7.2 billion on Pakistan after the existing standby arrangement programme, out of which the federal government utilised loan of $1.1 billion for budgetary support and $6.1 billion was put by the central bank for building up foreign exchange reserves, it said.

Total public debt: Pakistan’s total public debt stood at an estimated Rs8,160 billion as of end-March. At this level, the public debt is equivalent to 56 per cent of the GDP, and 379 per cent of the total budgeted revenue for the year.

Of the total, the rupee-denominated debt amounted to 31 per cent of the GDP and the foreign currency-denominated debt was equivalent to 25 per cent of the GDP, the survey said.

The bulk of increase in the public debt during the first nine months of 2009/10 was recorded under higher cost domestic debt, with the government forced to borrow from the onshore credit markets in the absence of meaningful flows of external assistance, barring disbursements under the IMF loan, it said.

Domestic debt jumps by 22 per cent: Domestic debt rose by 22 per cent in annualised terms during July to March. Another source of increase has been the depreciation of the rupee against the dollar between July 2009 and March 2010, amounting to 4.4 per cent. The weaker rupee added 17 per cent to the public debt in the first nine months of the year, it said.

The public debt has risen rapidly since 2005/06. While the relative debt burden measured either as a per cent of the GDP or of total revenue, does not depict a significant deterioration in the debt dynamic, the net annual addition to the debt stock has been fairly rapid over the last four years, it said.

The primary sources of accumulation in the public debt stock since 2005/06 was caused because of currency translation losses on foreign exchange-denominated debt. For 2007/08 and 2008/09, the cumulative depreciation of over 25 per cent of the rupee against the dollar is estimated to have increased the public debt stock by approximately Rs235 billion or a total of 11 per cent increase on this count alone over the last two years, it added.

Highlights

• Each Pakistani liable to pay Rs80,000 debt

• Total public debt stands at 55.6pc of the GDP

• Domestic currency debt stands at 36pc of the GDP

• Foreign currency debt stands at 25pc of the GDP