Foreign loans swell to $15 billion in July-March
Pakistan’s former Tehreek-e-Insaf (PTI) government contracted $15 billion in gross foreign borrowing during its last nine months in office, bringing total gross foreign borrowing to over $57 billion during its tenure. reign.
The Ministry of Economic Affairs released the external debt bulletin on Thursday for the July-March period of the current fiscal year.
The figures were released the day Pakistan’s outgoing Finance Minister Shaukat Tarin and his successor blamed each other for the worrying debt situation.
Total loans received by former Prime Minister Imran Khan’s last government from July to March of the current fiscal year amounted to $15 billion, according to data from the Ministry of Economic Affairs and Bank of India. State of Pakistan (SBP).
These include the disbursement of $13.5 billion by international creditors and nearly $1.4 billion by overseas Pakistanis.
The Ministry of Economic Affairs said it recorded gross foreign lending of $12.6 billion in July-March of the 2021-22 financial year.
SBP data showed it had also received nearly $1.4 billion in very expensive foreign loans under Naya Pakistan Certificates – a new debt instrument introduced by the previous PTI government to take on more loans. strangers.
As a result, cumulative gross foreign loans secured in the first nine months of the current fiscal year jumped to a record $15 billion, official statistics showed.
About 90% of new gross external lending was aimed at filling the budget gap and supporting foreign exchange reserves, which remain at an extremely low level of $10.8 billion.
The former Prime Minister remained very critical of the country being buried under the burden of debt by the PPP and PML-N governments. But his government broke all previous records when it came to taking out new borrowing and adding net debt.
Khan’s government took on gross borrowings of $57 billion during the 43-month rule, including loans taken on the central bank’s balance sheet like United Arab Emirates (UAE) $2 billion and an exchange additional Chinese currency of 1.5 billion dollars.
Lily Interest free loans of Rs7.6b disbursed
Previously, the gross foreign borrowing figure was reported at $53 billion due to the exclusion of the UAE and additional Chinese currency borrowing from the calculations.
Of $57 billion, the previous government repaid $26 billion in repayments and added $31 billion to the external public debt that falls under the Department of Finance.
The PML-N government had taken out about $33 billion in gross foreign loans in its first four years in office
In June 2018, external public debt stood at $75.3 billion, and by December 2021 it has already reached $102.3 billion – an addition of $27 billion under Imran Khan’s leadership.
The net addition during the Khan period could reach $30 billion once March data becomes available.
Statistics from the Ministry of Economic Affairs showed that in the fiscal year 2018-2019, the PTI government contracted gross foreign borrowings amounting to $11 billion.
Another $2 billion loan was taken from the UAE on the central bank’s books. That year, the International Monetary Fund (IMF) classified China’s safe as external public debt.
The former government took $10.6 billion in 2019-2020, excluding IMF borrowing.
In fiscal year 2020-21, the PTI government took on gross foreign loans of $14 billion. The Ministry of Economic Affairs reported $12.6 billion in foreign loans in nine months. Separately, the PTI government took $3 billion from the IMF and $2.4 billion under the Naya Pakistan Certificates which are accounted for in the SBP accounts.
Due to the increasing use of loans to increase foreign exchange reserves and finance the budget deficit, the cost of servicing the debt has risen considerably.
After the new government told the cabinet about the deteriorating debt situation, former finance minister Shaukat Tarin and Miftah Ismail blamed each other for the debt situation.
“Miftah Ismail, please don’t deceive people,” Tarin remarked.
The total debt incurred by the PTI government was 17.8 trillion rupees. Of which 8.9 trillion rupees were interest payments, 4.4 trillion rupees from rupee devaluation, 400 billion rupees as buffer stock and only 3.9 trillion rupees were net borrowings, Tarin tweeted.
He added that the debt-to-GDP (gross domestic product) ratio was 71.5% of GDP at the end of the PML-N government, which Tarin said was reduced to 66% during the PTI’s tenure.
However, Tarin miscalculated the debt-to-GDP ratio by using two different base years of the economy, inviting reaction from his predecessor.
The total debt increased by the PTI in March 2022 exceeded 20 trillion rupees.
“Why are you giving December 2021 numbers,” Ismail replied through his series of tweets. “Isn’t that cheating? Surely we expect better from you,” Ismail said.
The newly appointed Finance Minister said that the budget deficits incurred by PTI in the first three years amounted to Rs 10.22 trillion.
“When you calculate debt to GDP, why (Tarin) do you use different bases on our year and yours,” Ismail questioned while pointing out the inconsistencies in the argument built by his predecessor.
Published in The Express Tribune, April 22n/a2022.