ISLAMABAD: The International Monetary Fund (IMF) has projected Pakistan’s external debt to reach $140.959 billion in 2022-23 up from $130.127 billion in 2021-22.
The IMF in its report seventh and eighth reviews under the extended arrangement under the extended fund facility, requests for waivers of non-observance of performance criteria, and for extension, augmentation, and re-phasing of access projected Pakistan’s domestic debt at Rs31.085 trillion for 2022-23 and Rs33.540 trillion for 2023-24.
The report notes that Pakistan’s public debt continues to be judged as sustainable with strong policies and robust growth, but with greater uncertainty, in part because the fiscal relaxation in fiscal year 2022 second half (H2) prevented the debt ratio reduction projected at the time of the sixth review.
The debt-to-GDP ratio is now projected to rise from 77.9 percent at end-fiscal year 2021 to 78.9 percent at end-fiscal year 2022 before falling to around 60 percent by end-fiscal year 2027, assuming the adjustment efforts in the context of the EFF programme are fully carried out.
The report projected higher interest rates, a larger-than-expected growth slowdown due to policy tightening, pressures on the exchange rate, renewed policy reversals, slower medium-term growth, and contingent liabilities related to SOEs pose significant risks to debt sustainability.
Copyright Business Recorder, 2022