KARACHI: During the first nine month of current fiscal year, External Debt and Liabilities (EDL) recorded an increase of $10.6 billion — including a public debt of $74.2bn — to stand at $105.8bn at end March 2019, said the Economic Survey 2018-19 issued on Monday.

Disbursements from bilateral sources remained the main contributor in gross external public debt disbursements with a share of 48pc or $4.004bn. The survey noted that out of the total bilateral sources, disbursements from China stood at $3.885bn or 97 per cent of total amount.

“The government is tapping new international markets as well as considering to introduce an international bond programme instead of borrowings through stand-alone transactions. This is expected to increase investor base, lower borrowing cost and allow the government to optimise timing of issuance as well as save time in execution of debt transactions,” the survey noted, adding that the government will continue to seek long term concessional loans for development purposes.

The survey reported that external public debt increased by around $3.9bn during first nine months of current fiscal year compared with the increase of $ 6.7bn witnessed during the same period last year.

Pakistan’s EDL include all foreign currency debt contracted by the public and private sector as well as foreign exchange liabilities of SBP. The part of EDL which falls under government domain is debt which is serviced out of consolidated fund and owed to International Monetary Fund whereas remaining includes liabilities of central bank, debt of public sector entities, private sector and banks.

Borrowing from commercial sources (foreign commercial banks and Eurobonds/sukuk) have relatively increased during the last few years, however, external public debt still largely comprises multilateral and bilateral sources which cumulatively constituted 78pc of external public debt portfolio at end March 2019.

Foreign commercial loans contributed $3.108bn in total disbursements. These commercial loans were primarily obtained for balance of payment support. The government mobilised $1.150bn from multilateral sources largely for energy and infrastructure projects.

During first nine months of the current fiscal year, servicing of external public debt was recorded at $5.608bn. Segregation of this aggregate number shows repayment of $4.139bn towards maturing external public debt stock while interest payments were $1.470bn.

External public debt to GDP ratio grew to 22.3pc at end June 2018 compared with 20.5pc in the same period in 2017, depicting an increased external debt burden.

“At end March 2019, this ratio further increased and recorded at 25.8pc. Apart from increase in external public debt stock, reduction in GDP size in US dollar terms contributed towards increase in this ratio,” said the Survey.

Relatively higher growth in external public debt stock pushed the External Debt to Foreign Exchange Earning (ED/FEE) ratio to 1.3 times during 2017-18 compared with 1.2 times during preceding fiscal year. During 2017-18, ED/FER recorded at 4.3 times, registering a significant increase from 2.9 times during 2016-17. “At end March 2019, this ratio was recorded at 4.3 times.”

Published in Dawn, June 11th, 2019