Public debt reached Rs 16.94 trillion by end-March 2015 showing an increase of Rs 940 billion during first nine months of current fiscal year as compared to Rs 15.99 trillion during the same period last year, revealed the Economic Survey 2014-15 released here on Thursday. According to the survey the primary source of increase in public debt was domestic debt that positioned at Rs 11.93 trillion representing an increase of Rs 1.012 trillion, whereas, external debt posted at Rs 5.004 trillion representing a decrease of Rs 72 billion as compared to end June 2014.
The decline in external debt is mainly attributed to huge translational gain of around $4.3 billion on account of appreciation of US dollar against other major currencies. During July-March, 2014-15, public debt servicing was recorded at Rs 1.19 trillion against the annual budgeted estimate of Rs 1.686 trillion. Public debt servicing consumed nearly 44.5 percent of total revenues during first nine months of current fiscal year against a ratio of 47 percent during the same period last year. Ideally, this ratio must be below 30 percent to allow government to allocate more resources towards social and poverty related expenditures.
The share of permanent debt in total domestic debt increased significantly to 41 percent of total domestic debt at the end of March 2015 as compared with 23 percent at the end of 2012-13. The total amount of permanent debt in the total domestic debt stood at Rs 4.836 trillion as at end March 2015, representing an increase of Rs 830 billion or 21 percent higher than the stock at the end of last fiscal year. Around 82 percent of the total increase in domestic debt stock was contributed by permanent debt during July-March, 2014-15.
Domestic debt increased by Rs 1.012 trillion during first nine months of current fiscal and recorded at Rs 11.932 trillion at end March 2015. This increase mainly stems from net issuance of PIBs and T-bills amounting to Rs 781 billion and Rs 566 billion respectively, while the stock of Market Related Treasury Bills (MRTBs) amounting to Rs 605 billion was retired during first nine months of current fiscal year. In relation to GDP, the domestic debt stood at 43.6 percent as at end March 2015.
According to the survey during first nine months of current fiscal year, the government issued fresh/rollover guarantees aggregating to Rs 67 billion or 0.2 percent of GDP. The outstanding stock of government guarantees by end March, 2015 was recorded at Rs 600 billion. Floating debt recorded a decrease of Rs 38 billion during first nine months of current fiscal year and stood at Rs 4,573 billion at end March 2015. External Debt and Liabilities (EDL) stock was $62.6 billion by end March 2015 out of which external public debt was $49.1 billion. Public external debt witnessed a decline of $2.3 billion during first nine months of current fiscal year despite net positive disbursements.
During first nine months of 2014-15, disbursements including loans and grants stood at $4,001 million compared with $2,301 million during the same period last year. Pakistan also received $2,106 million from the IMF. Importantly, net inflows from the IMF stood at $1,041 million during first nine months of current fiscal year compared with net outflow of $861 million during the same period last year.
The Pak Rupee depreciated against the US Dollar on average by 3.8 percent per annum between 2009-10 and 2013-14 which resulted in increase in Pakistan's external debt in local currency. Pakistan's loss on foreign currency debt is mitigated by the concessional terms (low cost and longer maturities) associated with its external loans ie the cost of adverse currency movements and existing external debt rates is still lower than the cost of domestic debt by approximately 5.3 percent over the last five years.
By end March, 2015, 91 percent of total external debt is contracted in 3 major currencies (adjusted for Special Drawing Rights). External public debt witnessed a huge translational gain of around $4.3 billion during first nine months of current fiscal year on account of appreciation of US Dollar against other major currencies, however, depreciation of Pak Rupee against US Dollar by around 3 percent during the same period reduced this gain in rupee terms.
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