Total debt scales Rs14.5 trillion mark

ISLAMABAD: Pakistan’s public debt and liabilities crossed Rs13.5 trillion by end-September 2012 and the major chunk of this amount – a staggering Rs8.12 trillion – was consumed by domestic debt, according to the data released by the State Bank of Pakistan on Friday. However, a closer reading of the data shows that the size of total debt is Rs14.5 trillion.

According to the SBP’s data, total external debt and liabilities at the end of September 2012 touched $66.24 billion. This amount includes bilateral and multilateral debt held by the federal government as well as the IMF loans payable by the State Bank of Pakistan. Further, this amount also includes foreign exchange liabilities, guaranteed and non-guaranteed debt, borrowing by banks, non-resident deposits and private sector debt. Of the total outstanding external debt and liabilities, public debt was at $56.386 billion.

“There is a need to differentiate between public debt and total debt,” said Rana Assad Amin, who is the adviser to the finance ministry. “Total debt includes debt obtained by the private sector but the government counts as public debt only that amount for which it could be held responsible for repayment.”

By the end of June 2012, Pakistan’s debt-to-GDP ratio stood at 61.5 percent and the figure has not been officially revised since.

Independent analysts say that irresponsible fiscal management, sharp depreciation of the rupee and low economic growth are responsible for the surge in public debt over the last four years. According to these analysts, a one-rupee slide in the value of the dollar increases public debt by Rs62 billion and the rupee slid by Rs37 – from Rs 60 to a dollar to Rs 97 to a dollar – in the last four years. Meanwhile, others are worried about the prospective impact of this burgeoning debt. “High levels of public debt will result in higher interest repayments,” said former economic adviser Dr Ashfaque Hasan Khan. “Even now, interest repayments are consuming 56 percent of the FBR’s revenues. And these unsustainable levels of public debt will be a burden on future generations who will service this debt through exorbitant taxation.”

The SBP data show that of the total domestic debt of Rs8,120 billion held by the central government, long term debt stood at Rs3.78 trillion (comprising permanent debt worth Rs1.85 trillion, federal government bonds worth Rs1.49 trillion and prize bonds worth another Rs350 billion).

Meanwhile, unfunded debt stood at Rs1.94 trillion, of which Rs1.82 trillion was obtained through National Savings Schemes, Rs67 billion through postal life insurance and Rs55 billion GP Fund. And short-term debt stock by end September 2012 stood at Rs4.34 trillion.

The government’s external debt runs to $46.86 trillion. The break-up shows that Islamabad owes the Paris Club $15.33 billion and multilateral sources (including the World Bank, the Asian Development Bank and the Islamic Development Bank) another $25.66 billion. Yet another $2.603 billion are owed to bilateral lenders; $1.55 billion to owners of Euro/Sukuk bonds; some $103 million under the military debt head; $200 million under the Saudi Fund for Development and $1 billion SAFE China deposits.

Of the short term loans, the outstanding loan of the IDB stands at $388 million. Total outstanding loans from the IMF stand at $7 billion of which the federal government will have to repay $1.855 billion and the SBP needs to repay $5.149 billion.

By the end of September 2012, public sector enterprises had obtained loans to the tune of $1.59 billion.

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