Official numbers issued by the State Bank of Pakistan (SBP) indicate thatPakistan’s overall debt and liabilities have eclipsed Rs. 50 trillion.
Pakistan’s overall debt and liabilities had reached a new high of Rs. 50.5trillion by the end of September 2021, which was an increase of Rs. 20.7trillion over the previous three years and three months. The country’sentire debt has increased by nearly 70 percent, according to the officialdata.
The incumbent government has added Rs. 16.5 trillion to the country’spublic debt so far, which is 165 percent of the debt that was acquired bythe previous government in five years.
The national debt had soared to Rs. 41.5 trillion by September this year —an increase of Rs. 16.5 trillion. According to the official report, thetotal public debt has climbed by 66 percent from July 2018 to September2021, while the overall public debt since 30 June 2021 has risen to almost77 percent of the GDP due to additions from the fiscal year 2018-19 toSeptember 2021.More Debt
The federal government’s entire domestic debt has risen to Rs. 26.4trillion, indicating an increase of Rs. 10 trillion (61 percent) since June2018.
Its external debt has escalated by 77 percent to Rs. 13.8 trillion mainlybecause of the depreciation of the currency and the accumulation of foreigncurrency reserves through borrowing. The Rupee-to-Dollar exchange rate wasRs. 170.37 in September 2021 and Rs. 121.54 in June 2018, illustrating asignificant depreciation of about Rs. 49 (41 percent). Meanwhile, thecurrent rate of exchange is roughly Rs. 175.
The total external debt and liabilities (that were below $100 billion threeyears ago) have reached a new high of $127 billion, denoting an increase of$32 billion.
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The external public debt, which falls under the jurisdiction of the federalgovernment, rose by $24.4 billion from $75.3 billion in June 2018 to $99.7billion in September of this year.
In extension, the debt from the International Monetary Debt (IMF) that was$6.1 billion three years ago swelled to $7.1 billion by September 2021. Thecost of debt payment has risen dramatically as a direct result of theexpanding debt burden as the majority of the loan repayments are being doneby signing new loan deals.
Prime Minister Imran Khan had said prior to the central bank’s release ofthe official debt statistics that “our biggest problem is that we don’thave enough money to run our country due to which we have to borrow loans”.
He highlighted that the rising foreign debt and truncated tax recovery hadbecome a “national security” issue as the government did not have enoughfunds to spend on people’s welfare.
While his remarks stand corrected, the most straightforward repercussionsof the country’s inflating debt pile are putting pressure on the cost ofdebt servicing, and chances are the next fiscal year may showcase somethingof a similar but worse nature.
