Pakistan’s gross public debt gushed by 16.6% during FY18

LAHORE: The annual report on “State of Economy” for FY18, released by State Bank of Pakistan on Thursday stated that the gross public debt of Pakistan has mounted by almost 16.6% during the FY18, which is almost two times as compared to the rate recorded in FY17.

According to the central bank statement, the amplified macroeconomic balances and expanding of twin deficits had added up to Pakistan’s debt rate magnification.

It is observed that, the gross public debt had boosted by almost 5.6% to 72.5% of GDP by the end of June 2018, and likewise was demonstrated in government debt.

The report affirmed the debt to GDP ratio lingered higher than 60% limit predicted in the Fiscal Responsibility & Debt Limitation Act (FRDLA), 2005.

“In complete terms, gross public debt has attained to level of Rs 25trillion by June 2018 end, showing a rising trend of Rs 3.5 trillion during FY18.”

SBP also stated that, “More than half of this record accretion in gross public debt in a year is mainly added by public external debt, which grew by 30.1%.”

The main reason behind the enlargement in public debt is addition by the recent payments received from China, foreign commercial banks and earnings from Eurobond/Sukuk issuance.

Furthermore, the depreciation of Pakistani rupee, against appreciation of various international currencies plays vital role in the debt crisis.

The central bank has further cautioned that such rising rate of debt can strengthen the revaluation collision, due to exchange rate variation time and again.

Central bank has revealed that, in terms of maturity arrangement, the government shall carry on its dependence on the short-term domestic borrowing during FY18 as it has rose by 1.5 times as compared to FY17.

Furthermore, public debt is one factor, which also includes rise in public-sector enterprises debt and loans for commodity loans and external liabilities, due to which Pakistan’s total debt and liabilities (TLDL) are at the level of 86.8% of GDP, at June 2018 end as compared to June 2017 end.