ISLAMABAD: Minister for Finance and Revenue Shaukat Tarin said that a total of public debt as at end-September 2021 stood at Rs41.4 trillion, out of which domestic debt was Rs26.4 trillion and external debt was Rs15.0 trillion.
In written replies to questions in the National Assembly, on Thursday, the minister said the government borrowing remains vital part of financing mechanism for developing countries such as Pakistan and is a routine function of most sovereigns across the globe. Most economies world-wide rely on debt inflows to fulfill the shortfall in available resources to fund the government budget.
He said that borrowed funds are at times also required for resource-intensive infrastructure projects, which are geared towards facilitating economic growth and achieving social development goals.
He said the government of Pakistan will also borrow to mainly finance its budget deficit approved by the parliament every year. In another written reply to a question, Minister for Economic Affairs Omar Ayub Khan said that from 1st August 2018 to 31st October 2021, the government of Pakistan received a total of $38.8 billion in the form of foreign loans and grants.
Jul 2018-Jun 2021: Total public debt up by Rs14.9trn, Tarin tells NA
He said the government received $1.007 billion grant and $37.857 billion loan during that period. He said that on the one hand, foreign loans and grants are obtained to bridge the financing gap (fiscal deficit) and meet development needs of the federal and the provincial governments.
He said that on the other hand, foreign inflows are also used to meet the external payments and liabilities including debt servicing.
He said that against receipt of $37.857 billion foreign loans, the government of Pakistan paid $29.815 billion as external debt servicing including principal and interest payments during August 2018 to October 2021.
He said that thus, net inflow is only $8.042 billion in 39 months
($2.474 billion/year on average).
Whereas, during the period of July 2013 to June 2018 (5-years), the Government of Pakistan received $49.762 billion as foreign loans and repaid $27.071 billion as debt servicing, he said.
He said the net inflow was $22.691 billion during the 5 years (4.538 billion/year on average).
The minister said that as compared to debt servicing of $27.071 billion during July 2013 to June 2018 ($5.414 billion/year on average) by the previous government, the present government inherited historic high level of debt servicing.
As a result of this, the government had to pay $29.815 billion during August 2018 to October 2021 ($9.174 billion/year on average) on account of external debt servicing including principal and interest, he said.
Copyright Business Recorder, 2021
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