ISLAMABAD: Pakistan’s public debt increased by around Rs4.64 trillion in the first nine months of the outgoing fiscal year despite a slowdown in the rate of accumulation.

According to the Economic Survey 2023-24 released on Tuesday, the total public debt was recorded at Rs67.53tr at end March 2024.

At the end of June 23 — the last month of FY22-23 — the figure stood at 62.88tr.

The rate of debt accumulation slowed down by 54 per cent from Rs10tr in the first nine months of the last fiscal year to 4.64tr at the end of Mar 24 “due to the exchange rate stability”.

According to the breakdown, the total domestic debt up to Mar 24 was recorded at Rs43.43tr, while the external component was Rs24.09tr.

Rate of accumulation in 9MFY24 slows to Rs4.64tr compared to Rs10tr in FY23

The former recorded an increase of 4.63tr in the first nine months of FY24, while the latter grew by Rs22bn.

The survey highlighted that the public debt portfolio witnessed various positive developments during the first nine months of the outgoing fiscal year, including 88pc fiscal deficit financing through domestic markets and only 12pc from external sources.

Debt breakdown

A breakdown of the domestic debt showed that permanent debt — mainly medium to long-term instruments like PIBs, Government Ijara Sukuks and Prize Bonds — stood at Rs31.2, or 72pc of total portfolio at the end of Mar 2024. The component went up by Rs5.7tr during the first nine months of the ongoing fiscal year.

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The component of floating debt — mainly short-term instruments — was recorded at Rs 8.5tr while unfunded debt was Rs2.8tr at the end of Mar 2024.

The debt owed to multilateral sources increased by $1.7bn, with main inflows coming from IMF $1.9bn, World Bank $1.4bn, ADB $657m and Asian Infrastructure Investment Bank $300m.

The bilateral debt stock increased by $648m with inflows of $2bn from Saudi Arabia as deposits.

Among the major components of external loans were from multilateral bodies and bilateral — both concessional in nature with long tenor and low interest rates — at 53pc and 21pc, respectively.

Deposits from China and Saudi Arabia accounted for 10pc, while loans from foreign commercial banks constituted around 6pc of the external debt.

Debt servicing and repayment

The cost of public debt servicing was recorded at Rs 5.5tr during the first nine months of FY24, against the budgeted estimate of Rs7.3tr.

This included Rs4.8tr interest expense incurred on domestic debt — 55pc higher compared to the same period of the preceding year.

Interest payments on external debt stood at Rs710bn against the budgeted estimation of Rs872bn.

The government repaid $5.33bn of external public debt during the first nine months of FY24 with $2.8bn repayments to multilateral bodies, $2bn against bilateral debt and $0.6bn against Naya Pakistan Certificates.

The survey concluded that the government aimed to bring down the debt burden to a sustainable level through budget surpluses, low inflation and exchange rate based on economic fundamentals.

Published in Dawn, June 12th, 2024