ISLAMABAD, Pakistan: The Ministry of Finance has clarified that out of total increase of $17.6 billion in the Country’s external debt and liabilities, the Pakistan Tehreek-e-Insaf (PTI)-led government borrowed US$ 7.8 billion (44%) for the financing of its fiscal deficit.
In a statement with reference to a news item published in a section of press regarding the increase in external debt and liabilities of the Country during the past two years, the ministry said that this amount of US$ 7.8 billion was the actual borrowing of the present government during its first two years.
The finance ministry said that the figure of increase in external debt and liabilities by US$ 17 billion reported by the State Bank of Pakistan (SBP) needs to be properly interpreted for a better understanding.
The figure of external debt and liabilities consists of the following four components:
- External Public Debt
- Public Sector Entities (PSEs) Debt
- Foreign Exchange Liabilities of SBP
- Private Sector’s External Debt
Out of total increase of US$ 17.6 billion in external debt and liabilities during June 2018-June 2020:
- US$ 7.8 billion (44%) has been borrowed by the government for financing of its fiscal deficit. This amount of US$ 7.8 billion was the actual borrowing of the present government during its first two years.
It is important to highlight that these additional borrowings were from multilateral and bilateral development partners whereas a portion of loans from commercial sources was repaid.
Borrowing from multilateral and bilateral development partners were contracted on low cost and longer tenor, which contributed towards enhanced external public debt sustainability during the tenure of the present government.
- US$ 4.8 billion (27% of the increase) is on account of SBP’s foreign exchange liabilities.
It should not be interpreted as the government’s debt because it is offset by cash balances and liquid assets of the SBP.
- US$ 2.9 billion (16% of the increase) has been borrowed by the private sector from external sources which is a healthy sign indicating the private sector’s capacity to borrow from abroad for domestic investments.
- US$ 2.2 billion (13% of the increase) has been borrowed primarily by PSEs from spending on their financing needs mostly related to the development expenditures.