Pakistan’s external public debt has experienced a noteworthy increase, surging by $1.2 billion in the span of six months, reaching a total of $86.358 billion as of September 30, 2023, according to the latest report from the Ministry of Economic Affairs (MEA).
In its inaugural quarterly report on Foreign Economic Assistance (FEA) for the ongoing fiscal year, the Ministry disclosed that Pakistan received a total of $3.5 billion in foreign inflows from July to September 2023. This influx was accompanied by loan repayments amounting to $1.5 billion, resulting in a net inflow of $1.97 billion.
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The MEA underscored that approximately 64% of Pakistan’s total external public debt originated from multilateral and bilateral sources, featuring concessional terms and extended maturities. Despite challenges posed by poor credit ratings and high-interest rates, Pakistan secured new agreements totaling $642 million in fresh commitments during the first quarter, primarily funded by multilateral development partners, as international bonds and commercial loans remained elusive.
Disbursements during July to September 2023-24, totaling $3.538 billion, were predominantly in the form of project and program loans and grants from multilateral development partners, bilateral development partners, and financial institutions. These funds played a crucial role in supporting economic reforms, executing development activities, and addressing the nation’s balance of payments.
The report highlighted Pakistan’s commitment to debt servicing, with the government paying $2.404 billion during the first quarter of the fiscal year. This included principal repayments of $1.627 billion and interest payments totaling $777 million, resulting in a positive balance for the government’s external public debt.
Breaking down the disbursements, the MEA outlined allocations for various sectors, with $101 million dedicated to flood mitigation efforts, $64 million for energy and power projects, and $52 million for the water sector. Additionally, funds were allocated for transport and communication, health and nutrition, agriculture, and physical planning and housing.
Despite the increase in external debt, the report emphasizes a positive outlook, with a significant portion of the debt secured on concessional terms with extended maturities. This strategy aims to mitigate the adverse effects of borrowing while supporting Pakistan’s economic growth and development initiatives.
