28 in Pakistan’s debt from June 2021 to September 2022 percent or 11.3 trillion rupees increased and the total debt became 51.12 trillion.
A Dawn newspaper report said that the reason for the increase in debt is the rise in interest rates, inflation, and additional borrowing for economic growth.
The report stated that the total debt was Rs 39.87 trillion at the end of June 2021, which increased to Rs 49.19 trillion by the end of June 2022, an increase of Rs 9.3 trillion during that period.
Debt increased by another Rs 51.13 trillion by the end of September 2022, breaching the Fiscal Responsibility and Debt Limitation Act (FRDLA) level by a wide margin.
As a result, the debt-to-GDP ratio increased from 71.5 percent of GDP in June 2021 to 73.5 percent at the end of June 2022, and the debt per citizen increased from Rs.175,625 in June 2021. In September 2022, it became 2 lakh 25 thousand 247 rupees and in just 15 months, the debt of every citizen increased by 50 thousand rupees, which is 28 percent.
The above figures were revealed in the Debt Policy Statement tabled in Parliament on Friday, which is a statutory requirement of FRDLA.
Pakistan’s debt-to-GDP ratio increased by 2 percent during the fiscal year 2022 and stood at 73.5 percent at the end of June 2022 from 71.5 percent at the beginning of the year. The opposite effect was caused by the depreciation of the rupee, which was 5 percent of GDP.
The report stated that this ratio for Pakistan was below the pre-pandemic level of 74.7 percent, while the global level of debt-to-GDP remained higher than before the pandemic.
Domestic debt was Rs 26.26 trillion at the end of June 2021, which increased to Rs 31.04 trillion by June 30, 2022, and further increased to Rs 31.40 trillion by the end of September 2022, the policy statement said.
Similarly, the external debt was 13.60 trillion rupees in June 2021, which increased to 18.16 trillion rupees in June 2022 and 19.73 trillion by September 2022.
It was further stated that the main reason for the sharp increase in debt was the exchange rate loss of Rs 3.76 trillion, which was further increased by Rs 3.18 trillion due to the increase in interest rates and the impact of the core deficit of around Rs 2.43 trillion.
The report claimed that the government is committed to reducing the debt-to-GDP ratio and is moving towards debt reduction with a reduction in the fiscal deficit.
External debt stood at $88.8 billion at the end of June 2022 and has increased by $2.4 billion this year and a total of $2.4 billion from other institutions and countries, the policy statement said.
In this regard, it was informed that Pakistan received one billion rupees with different tranches of 5, 10, and 30 euro bonds, while commercial loans of 300 million dollars and debt reduction of 700 million dollars in government securities, Naya Pakistan Certificates, and Pakistan Banau Certificates. Non-residential investment.
The largest external disbursement during the fiscal year 2021-22 was $16.2 billion, which was against $11 billion in external debt.
External debt increased from 34 percent in FY 2020-20 to 37 percent in 2021-22 and the minimum rate remained below 40 percent the main reason for the increase was the exchange rate.
The guarantees issued by the new government are limited to 10 percent of GDP during the financial year at the rate of 2 percent of GDP under FRDLA and these guarantees are applicable on both domestic and foreign sides.
