Federal govt ‘likely to allocate considerable amount’ for debt repayments despite slight relief

Official reports suggest that the TDL stand around Rs45 trillion by the end of March 2021 compared to Rs44.6 trillion at the end of June 2020. It is expected that the government would allocate a ‘considerable’ chunk for payments on interests against internal and external debt. 

According to official records, total debt of the government soared by 1.5 per cent in this period. Within external sources, multilateral and bilateral sources are the major contributors.

Total debt and liabilities stand at 95.3 per cent of the GDP at the end of third quarter of 2020-21 as against 103 per cent of GDP in the comparable period last year. So total debt and liabilities decreased by almost 8 per cent in one year. 

The debt to GDP ratio improved mainly because of increase in nominal growth as inflation remained on higher side, so the nominal size of growth also jacked up. Secondly, the exchange rate appreciated, so it also helped the government to show improvement in debt to GDP ratio.

Nonetheless this bit relief, economic experts are of the view that pandemic impact on overall economy could lead the government to further acquiring loans from the international financial institutions (IFIs) and national banks.

They say the ‘adverse’ coronavirus impact on the country’s economy is likely to prevail in the upcoming budget for FY22 at the cost of debt restructuring.     

Federal Minister Shaukat Tarin has also ‘admitted’ surge in debt, saying it was inevitable and it had to rise considering there was a fiscal deficit in the country.

"The total debt has only jumped by Rs1.7 trillion from 2020-21, which is a huge decline if we compare it with previous years. I am not condemning the fact that debt is growing but, at the same time, our economy is also moving towards stability,” he said while presenting the Pakistan Economic Survey 2020-21.