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The ratio of foreign debt of cash-strapped Pakistan has shot up from 36.9 per cent in FY22 to 38.3 per cent in FY23, according to a media report on Friday.
The Ministry of Finance’s Annual Debt Review and Public Debt Bulletin FY2023 comes amid unchecked domestic inflation as the cash-strapped Pakistan’s economy has been in a free-fall mode for the last several years.
Terming it as “an alarming development”, Geo News said, the FY2023 Bulletin shows that “the total public debt peaked at Rs 62.88 trillion till the end of June 2023 against Rs 49.2 trillion, indicating that the total public debt increased by Rs 13.64 trillion during the last fiscal year 2022-23 in the tenure of Pakistan Democratic Movement (PDM) coalition government.”
After giving details of the total outstanding guarantees to public sector enterprises, those issued to the oil and gas sector and the guarantees issued against commodity operations, the report said, the ratio of domestic debt to total public debt in percentage has gone down from 63.1 per cent in FY22 to 61.7 per cent in FY23, but at the same time, the ratio of foreign debt has gone up from 36.9 per cent to 38.3 per cent, showing an increase in the ratio of foreign loans by 1.4 per cent.
“The incidence of foreign loans going up clearly indicates that the pace of accumulation of foreign debt has outpaced domestic debt mainly because of massive depreciation on account of the exchange rate,” the GeoTV report said.
“Despite the net reduction in the stock of external debt (in USD) during FY23, the share of external debt in total public debt increased from 37 per cent at the end of June 2022 to 38 per cent at the end of June 2023,” it added.
Earlier, after transferring $1.2 billion to the cash-strapped country in July, as part of the $3 billion bailout programme for nine months to support the government’s efforts to stabilise the country's ailing economy, the International Monetary Fund (IMF) is set to send its delegation to Pakistan in the last week of October to review the cash-strapped country’s economic performance in the first three months of the current fiscal year, a media report had said on October 3.
The report added that once the economic review is successfully completed, Pakistan will receive the next instalment of $700 million from the IMF after its board's approval.