LAHORE: The Ministry of Finances’ “Debt Policy Statement” for 2018-19 revealed the total public debt and liabilities breached Rs30 trillion by the end of September 2018.
According to the report, total public debt as a percentage of GDP stood at 72.5 percent while total debt of the government recorded at 67 percent as of end June 2018, remaining significantly higher than the 60% threshold envisaged in the Fiscal Responsibility & Debt Limitation (FRDL) Act, 2005.
The debt policy statement highlighted that composition of public debt in terms of maturity profile continued to exhibit unfavourable changes during 2017-18, as the government depended mainly on short-term domestic borrowing and most of the external loans were obtained through commercial sources.
It added this resulted in a breach in few indicative ranges for public debt risk indicators as defined in Medium Term Debt Management Strategy (2015-16-2018/19).
Moreover, the government could only adhere to the net-zero quarterly limit under 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 tenors to decrease the refinancing risk of its domestic debt portfolio and interest payments consumed 29% of government revenue, said the report.
Additionally, the government raised $2.5 billion via a five-year Sukuk and 10-year conventional bond with the latter issued at 6.875%, the lowest rate for a Pakistan ten-year international bond.
Due to rising twin deficits (current account and fiscal) hastened the pace of debt accumulation during 2017-18.
Total public debt touched Rs24,953 billion by end of June 2018, exhibiting an increase of Rs3,544 billion during the year.