Pakistan debt crisis: The latest report by Pakistan's Central Bank revealed that the country's total debt has increased 34.1% year-on-year to Rs 58.6 trillion at the end of April this year. According to the Pakistani media, the increase was 2. 6 per cent on a month-on-month basis.
The domestic debt amounted to Rs 36.5 trillion (62.3 per cent) while the external debt accounted for a 37.6 per cent share with Rs 22 trillion at the end of April. On an annual basis, the increase in external debt remained at 49.1 per cent, the State Bank of Pakistan (SBP) data showed. There was no change in the external debt figure from a month ago.
Within the domestic debt, the largest share was of the federal government bonds that represented almost Rs25 trillion worth of loans. Other major contributors to the domestic debt were short-term loans (Rs7.2 trillion) and unfunded debt (Rs2.9 trillion) that included money borrowed through National Savings Schemes. Funds obtained through federal government bonds rose 31.6 per cent from a year ago while the increase in the stock of short-term loans remained at 29.4 per cent.
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Domestic debt servicing is turning into huge challenge
On the one hand, Pakistan is battling a prolonged balance-of-payments crisis, with foreign exchange reserves covering only a month’s import bill. On the other hand, domestic debt servicing is becoming a huge challenge for the country given that interest rate has climbed to an unprecedented level amid record-high inflation.
Meanwhile, Pakistan has witnessed a fall of nearly 13 per cent in remittances sent from abroad in the first 10 months of the fiscal year due to the wide gap between the rates of the dollar in the interbank and open/gray market.
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Blame on Pakistan's State Bank and govt's faulty policies
Financial and exchange company analysts also blame the State Bank and government for its faulty policies and for influencing the exchange rates which has seen a drop in remittances and even from even foreign companies with investments in Pakistan.
The Pakistan rupee lost more value to the US dollar soon after the market opened on Tuesday. It should be mentioned here that the inflation level rose by a whopping 36.
4 per cent in the year in April, driven mainly by food prices. According to the country's statistics bureau, this is the highest in South Asia, and up from 35.4 per cent in March.
(With PTI inputs)
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