Pakistan’s total public debt has reached alarming levels, with external debt standing at $86.36 billion and domestic debt at Rs39.7 trillion as of the end of September 2023, said the Debt Policy Statement presented in the National Assembly on Thursday.

The report revealed that around 58% of the federal fiscal deficit financing was met through domestic sources while the remaining 42% came from external sources.

To manage the debt burden, the government retired approximately Rs452 billion in short-term debt (T-Bills) and issued Rs2.2 trillion in Pakistan Investment Bonds (PIBs) while also issuing Rs657 billion in Ijara Sukuks against zero maturity.

As of the end of June 2023, the external debt was recorded at $84.1 billion and domestic debt at Rs38.81 trillion. The long-term debt, which accounts for more than one year, stood at $86.2 billion, comprising $7.7 billion from the Paris Club, $44.9 billion from multilateral sources, $17.572 billion from other bilateral lenders, $7.8 billion in Euro/Sukuk Global Bonds, $5.55 billion in commercial loans, $560 million in Naya Pakistan Certificates, and $25 million in NBP/BOC deposits/PBC.

The report further detailed the composition of the domestic debt, which includes Rs25.55 billion in permanent debt, Rs9.335 billion in floating debt, Rs2.93 billion in unfunded debt, Rs475 million in SBP loans to the government against SDRs allocation, and Rs384 million in foreign currency loans.

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During the financial year 2023, total disbursements from external sources amounted to $9.889 billion while repayments were $14.73 billion. The majority of the disbursements, around 64%, came from multilateral institutions, with the Asian Development Bank, World Bank, and IMF being the largest contributors.

The ballooning public debt highlighted in the report underscores the urgent need for the government to implement comprehensive fiscal reforms and explore strategies to reduce the country’s debt burden and ensure sustainable economic growth.

The article was originally published on Business Recorder.