LAHORE: The Ministry of Finances’ “Debt Policy Statement” for 2018-19revealed the total public debt and liabilities breached Rs30 trillion bythe end of September 2018.
According to the report, total public debt as a percentage of GDP stood at72.5 percent while total debt of the government recorded at 67 percent asof end June 2018, remaining significantly higher than the 60% thresholdenvisaged in the Fiscal Responsibility & Debt Limitation (FRDL) Act, 2005.
The debt policy statement highlighted that composition of public debt interms of maturity profile continued to exhibit unfavourable changes during2017-18, as the government depended mainly on short-term domestic borrowingand most of the external loans were obtained through commercial sources.
It added this resulted in a breach in few indicative ranges for public debtrisk indicators as defined in Medium Term Debt Management Strategy(2015-16-2018/19).
Moreover, the government could only adhere to the net-zero quarterly limitunder the revised SBP Act 1956 in the second and fourth quarters of 2017-18.
Floating rate bonds were introduced by the government with 10-year tenorsto decrease the refinancing risk of its domestic debt portfolio andinterest payments consumed 29% of government revenue, said the report.
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Additionally, the government raised $2.5 billion via a five-year Sukuk and10-year conventional bond with the latter issued at 6.875%, the lowest ratefor a Pakistan ten-year international bond.
Due to rising twin deficits (current account and fiscal) hastened the paceof debt accumulation during 2017-18.
Total public debt touched Rs24,953 billion by end of June 2018, exhibitingan increase of Rs3,544 billion during the year.
