Between June 2021 and September 2022, Pakistan’s state debt grew by over 28 percent, or Rs11.3 trillion, to Rs51.13 trillion. This increase was primarily caused by policy recommendations like devaluations and interest rate increases, rather than new debt imports for economic development.
The overall public debt rose by Rs9.3 trillion from Rs39.87 trillion at the end of June 2021 to Rs49.19 trillion at the end of June 2022. By the end of September 2022, this increased even more to Rs51.13tr. Thus, there was a significant breach of the Fiscal Responsibility & Debt Limitation Act (FRDLA) standard.
As a result, the percentage of state debt to GDP rose from 71.5 percent of GDP in June 2021 to 73.5 percent by the end of June 2022. Thus, the per individual debt grew from Rs175,625 in June 2021 to Rs225,247 in September 2022, an increase of 28 percent and an extra debts of almost Rs50,000 per person in just 15 months.
This information is contained in the Debt Policy Statement that was presented on Friday to Parliament in accordance with FRDLA regulations. Pakistan’s debt-to-GDP ratio increased by 2 percentage points during FY22 and was 73.5 percent at the end of June 22 compared to 71.5 percent a year earlier. According to the statement, this was primarily caused by unfavorable exchange rate movement as a result of the rupee’s decline against foreign currencies, which accounted for about 5% of GDP.
Despite global debt-to-GDP levels continuing to be higher than pre-pandemic levels, Pakistan’s ratio stayed below the pre-pandemic level of 74.7 percent, according to the study. It exceeded the FRDLA requirement of 58 percent to be reached by FY22, though.
According to the policy declaration, domestic debt grew from Rs26.26 trillion at the end of June 2021 to Rs31.04 trillion on June 30, 2022, and then to Rs31.40 trillion by the end of September 2022. Similarly, the foreign debt rose from Rs13.60 trillion in June 2021 to Rs18.16 trillion in June 2022, and then to Rs19.73 trillion in the three months that followed, from September 2022 to December 2022.
Despite global debt-to-GDP levels continuing to be higher than pre-pandemic levels, Pakistan’s ratio stayed below the pre-pandemic level of 74.7 percent, according to the study. It exceeded the FRDLA requirement of 58 percent to be reached by FY22, though.
According to the policy declaration, domestic debt grew from Rs26.26 trillion at the end of June 2021 to Rs31.04 trillion on June 30, 2022, and then to Rs31.40 trillion by the end of September 2022. Similarly, the foreign debt rose from Rs13.60 trillion in June 2021 to Rs18.16 trillion in June 2022, and then to Rs19.73 trillion in the three months that followed, from September 2022 to December 2022.
