Pakistan’s debt mounts to Rs 10.745tr


KARACHI – The country’s total foreign and domestic debt has increased to a record mark of Rs 10.745 trillion by September 2010, while the debt to GDP ratio surged to 73.3 percent, up from 63.4 percent in September 2009.
In September 2009, the country’s combined debt stood at Rs 9.30 trillion, which rose to Rs 10.745 trillion due to the government’s massive borrowings to meet its budgetary deficit. The combined debt grew by Rs 445 billion between September 2009 and September 2010. According to the State Bank of Pakistan’s data on the country’s debt and liabilities, the government’s domestic debt had increased to Rs 4.958 trillion by September 2010, from 4.018 trillion in September 2009.
The external debt of the government also increased to Rs 3.864 trillion in September 2010 from Rs 3.656 trillion in September 2009. The IMF’s debt to Pakistan has gone up to Rs 768 billion by September, showing an increase of Rs 233 billion.By September 2010, the foreign debt was reported to be $58.41 billion as against $55.62 billion in June 2010, showing an increase of $2.79 billion in three months.
“The increase in the debt-to-GDP ratio to 73.3 percent is alarming and in violation of the Fiscal Responsibility Law (FRL) that restricts the ratio at 60 percent,” Dr Ashfaque Khan, former economic adviser to the Finance Ministry told Pakistan Today. “The government has to its credit so many violations and a violation of the FRL will be ad to that tally,” he added.”Our government left the quantum of debt around 55 percent, but now it has surpassed far above the limit of 60 percent, as envisaged in the FRL,” he said.
“If the borrowing spree continues, Pakistan will not be able to service its external debt soon, which would lead the country towards default,” he said, adding that the debt condition “seems a deliberate negligence of the government that can ruin the economy”.”Alarming increase in international oil prices in 2008 led to abnormal growth in our foreign debt,” Saad Bin Naseer, CEO of Pearl Capital, told Pakistan Today.
“Recent floods, low tax-to-GDP ratio, massive budgetary deficit and the launch of welfare schemes like Benazir Income Support Programme increased the domestic debt,” he said.”The government should reduce fiscal deficit, minimise unnecessary expenditures, welfare schemes, downsize the cabinet at the center and in the provinces and encourage investment and development to spur growth,” Naseer added.
Domestic debt hits Rs 5.5 trillion
KARACHI – Pakistan’s domestic debt hit the mark of Rs 5.50 trillion in December 2010 because of the government’s borrowing policy. In September 2010, the government’s domestic debt and liabilities amounted to Rs 5.191 trillion, which shot up to Rs 5.5 trillion in December 2010, showing an increase of Rs 306 billion in just three months.
On a year-on-year basis the domestic debt showed an alarming growth of Rs 1.05 trillion from December 2009 to December 2010. In December 2009, the domestic debt/liabilities stood at Rs 4.447 trillion rupees which increased to Rs 5.5 trillion by December 2010. Staff Report