KARACHI: According to analysts, a delayed loan tranche from the International Monetary Fund (IMF) and the devaluation of the currency dramatically increased Pakistan’s total debt and liabilities by Rs12 trillion, or 23.7%, in the first quarter of the current fiscal year.
According to figures released by the central bank on Wednesday, debt and obligations in the July–September fiscal year of 2023 were Rs62.46 trillion, up from Rs50.49 trillion in the corresponding period of the previous fiscal year.
The nation’s overall liabilities jumped 23% to Rs3.56 trillion, while its debt increased 24.7% to Rs59.37 trillion.The growth in debt, according to Fahad Rauf, head of research at Ismail Iqbal Securities, is primarily coming from outside sources.
To Rs31.40 trillion, the government’s internal debt climbed by 18.7%. According to data from the State Bank of Pakistan, the foreign debt reached Rs17.99 trillion in July–September FY2023, a 30.2% increase from the same period last year (SBP).
External debt and liabilities as a whole increased by 33.4% to Rs. 28.94 trillion.One of the major problems facing the government is managing debt commitments, according to Taurus Securities’ head of research Mustafa Mustansir.
He claimed that increasing fiscal and external responsibilities, as well as debt payments, were some of the causes of the nation’s expanding debt.”The depreciation of the rupee has an effect on the cost of borrowing from abroad.. Similar to this, local borrowing rates go up when the policy rate does.
According to figures from the State Bank of Pakistan (SBP), public debt decreased from Rs49.5 trillion at the end of August to Rs49.4 trillion at the end of September. In September, the debt increased by Rs9.1 trillion (22.7%) over the previous year.
Pakistan’s five-year credit default swap (CDS), which gauges the cost of insuring exposure to the country’s sovereign debt, rose to 7,550 basis points (bps) on Tuesday, up 1,929 bps from Monday’s closing, according to data from Arif Habib Limited.