Pakistan Economic Survey released on Thursday disclosed that total public debt surged during the current fiscal year was recorded at Rs 44,366 billion at the end-March 2022, registering an increase of Rs 4,500 billion during first nine months of current fiscal year.
According to the Pakistan Economic Survey (PES), apart from financing of federal fiscal deficit, the depreciation of Pakistani rupee against US Dollar by around 26 percentages led to significant increase in external public debt when converted into Pak rupees. Interest servicing was recorded at Rs 2,118 billion during the first nine months of the current fiscal year against its annual budgeted estimate of Rs 3,060 billion.
The domestic interest payments were recorded at Rs 1,897 billion and constituted around 90 percent of total interest servicing which is mainly attributable to a higher volume of domestic debt in the total public debt portfolio. Domestic debt was recorded at Rs 28,076 billion at end-March 2022, registering an increase of Rs 1,811 billion during the first nine months of the current fiscal year. Domestic borrowing was made entirely from the financial markets, government borrowed entirely through medium-to-long-term domestic debt instruments for financing of its fiscal deficit and retirement of short-term debt maturities.
The government retired a portion of Treasury Bills stock amounting to Rs 1.5 trillion which led to a reduction of short-term maturities in-line with the government’s commitment to reduce its Gross Financing Needs, the Survey said. An amount of Rs 569 billion was repaid to SBP; and government successfully issued Shariah Compliant Sukuks amounting to around Rs 1.1 trillion. Medium-to-long-term domestic debt securities remained the main source of funding during first nine months of ongoing fiscal year. Healthy participation was witnessed in the auction of government securities during the first nine months of FY2021-22.
Permanent debt mainly comprises medium to long-term instruments like PIBs, government Ijara Sukuks, and prize bonds, Permanent debt constituted 67 percent of the domestic debt portfolio and was recorded at Rs 18,714 billion at end-March 2022, representing an increase of Rs 2,803 billion during the first nine months of the ongoing fiscal year. According to the Survey, the floating debt was recorded at Rs 5,241 billion or around 19 percent of the total domestic debt portfolio at the end-March 2022.
During the first nine months of the ongoing fiscal year, a reduction of Rs 1,486 billion was witnessed in the stock of T-bills. The stock of unfunded debt stood at Rs 3,609 billion at end-March 2022, constituting around 13 percent of the total domestic debt portfolio. Unfunded debt recorded a net reduction of Rs 37 billion during the first nine months of the current fiscal year. The domestic debt also comprises of; (i) Naya Pakistan Certificates (held by residents only), which amounted to Rs 37 billion at the end-March 2022; and (ii) SBP on-lending to federal government against IMF SDR allocation, which amounted to Rs 475 billion at the end-March 2022. External public debt was recorded at US$ 88.8 billion at end-March 2022, increasing by around US$ 2.3 billion during the first nine months of the current fiscal year, PES said.