Pakistan’s external debt soared by Rs 907 billion in one month: SBP report

ISLAMABAD: The State Bank of Pakistan (SBP) released a report revealing that by the end of July 2023, the federal government’s debt had surged to Rs61.8 trillion. This shows a Rs 907 billion increase from the previous month.

Express Tribune, quoting the SBP’s report, said that data of the past 16 months also shows that the total debt accrued during Pakistan Democratic Movement (PDM) government’s 16-month tenure amounted to Rs 907 billion.

The public debt stood at Rs 44.4 trillion in March 2022, which had ballooned into Rs 61.8 trillion by July 2023. Pakistan Tehreek-e-Insaf’s (PTI) government had accrued Rs 18.1 trillion in public debt during its 44-month rule.

The primary contributor to this was the reopening of external financing lines, following negotiations between Pakistan and the International Monetary Fund (IMF). Another significant factor behind this increase came from currency depreciation. Without accounting for new borrowing, the currency depreciation alone drove up the external debt by a staggering Rs 7.8 trillion.

Pakistan Rupee appreciates by Rs7 against US Dollar in open market

The external debt’s share in the total debt is nearly 37 percent, making the country susceptible to currency fluctuations even without borrowing additional funds.

Over the past four years of the IMF program, Pakistan has failed to increase the tax-to-GDP ratio, a priority for both the IMF and the World Bank. The Federal Board of Revenue’s (FBR) tax-to-GDP ratio currently stands at 8.6%.

Caretaker Prime Minister Anwaarul Haq Kakar recently stated that he is searching for a new chairman of the FBR. Nevertheless, there appears to be little emphasis on reducing federal expenses in areas under provincial jurisdiction.