Pakistan’s public debt exceeds Rs8.3TR in one year

• Public debt increases by 13% FY2024, hitting RS71.2 trillion.
• The government is losing its debt reduction targets within Frdla.
• External debt has been up to $ 88.7 billion since September 2024.
  

ISLAMABAD: Despite progress in reducing debt track, the government failed to fulfill the total public debt reduction objectives described in the law on budgetary responsibility and debt restriction, which was approved by parliament, The news reported.

Although the government did not fall into parliament to restriction of public debt, mainly because of fiscal imbalances, it remains to see if Parliament will claim its power, asking questions to find out reasons behind this endless failure in achievement. of the boundaries provided to limit debt.

The finance ministry’s debt report shows that the country’s total public debt amounted to RS71.2 trillion FY2024 against the 62.8 trillion Rs in FY2023, rising by 8.34 trillion Rs in a period of one year.

During FY2024, total public debt increased by 13% to stand up to RS71.24 trillion in June 2024, of which domestic debt was 47.16 trillion and external debt in Rupia’s terms ranging around 24, 08 trillion trillions.

During Q1 FY2025, a marginal increase of 1.3% in public debt to stand in the RS72.13 trillion. With regard to debt to GDP, total public debt showed a 7.7% decrease to stand at 67.2% at the end of June 2024 compared to 74.9% of the gross domestic product (GDP) FY2023 .

The total external debt continued to rise during Q1-FY2025 to reach $ 88.7 billion from September-2024. 56% from September 2024) comes from multilateral economic development institutions, including the International Monetary Fund (IMF).

The second major source of external debt comes from bilateral partners, including the Paris Association, which has about 28% of external debt. 14% of external debt comes from commercial sources, 8% from international bonds and 6% from commercial banks.

During FY2024, external debt stock (in USD) recorded a net increase of 3% annually, while external debt share in total public debt decreased from 38% (June 2023) to 34% (June 2024).

Although the external debt report is still within a maximum of 40%, as provided for in the Medium Term Debt Strategy (MTDS), it remains sensitive to the exchange rate movement.

According to the debt policy statement drawn up by the Ministry of Finance on the submission of Parliament, Article 3 of the tax liability and debt restriction law (FRDLA) 2005 concerns the management of tax and debt management, where the federal government It must take steps to reduce the budget deficit (excluding grants) and the reason for total public debt to GDP and maintain it within certain prudent limits, which have been set as a debt to GDP, of which 60% was set by 2017-18, with a reduction of 0.5 0.5% each year to 2022-23 and 0.75% each year to 2032-33 to reduce the ratio to 50% and then keep it in 50 % or less.

In September 2024, total public debt amounted to 67.2% against the projected target under FRDLA 61%, so it lost.