- Govt aims for fiscal discipline through budget surplus, inflation control, and debt restructuring
In the shaping economic growth, sources recorded that external debt plays both a positive and negative role, chiefly of the developing countries. External debt is helpful when the government utilises it for investment-oriented projects like power, infrastructure and the agricultural sector. On the other hand, it would affect negatively when it is used for private and public consumption purposes, which do not bring any return. Additionally, a low level of external debt impacts economic growth positively, but this relationship becomes negative at a higher level.
| Pakistan’s External Debt And Liabilities – Outstanding (Million US$) | ||
|---|---|---|
| Description | 30-Sep-24 (R) | 31-Dec-24 (P) |
| A. Public external debt (1+2+3) | 100,619 | 98,331 |
| 1. Government external debt | 79,331 | 78,129 |
| i) Long term(>1 year) | 78,454 | 77,016 |
| Paris club | 6,990 | 5,746 |
| Multilateral | 39,903 | 39,664 |
| Other bilateral | 18,228 | 17,909 |
| Euro/Sukuk global bonds | 6,800 | 6,800 |
| Military debt | – | – |
| Commercial loans/credits | 5,600 | 5,775 |
| Local Currency Securities (PIBs) | 32 | 59 |
| Saudi fund for development. (SFD) | – | – |
| NBP/BOC deposits/PBC | 13 | 10 |
| NPC | 889 | 1,055 |
| ii) Short term (<1 year) | 877 | 1,112 |
| 2. From IMF | 9,246 | 8,493 |
| 3. Foreign exchange liabilities | 12,042 | 11,710 |
| B. Public sector enterprises (PSEs) | 7,352 | 7,302 |
| C. Banks | 7,077 | 7,204 |
| D. Private Sector | 12,606 | 12,183 |
| E. Debt liabilities to direct investors – Intercompany debt | 6,029 | 6,049 |
| Total external debt and liabilities (A+B+C+D+E) | 133,683 | 131,069 |
Presently statistics showed that Pakistan’s external debt and liabilities (outstanding) reached $131.07 billion at the close of Q4 FY2024, reflecting a decrease of $2.614 billion or 1.96 per cent QoQ. On a yearly basis, Pakistan’s external debt and liabilities went down by $-1014.28 billion or 0.77 per cent YoY during Q4 FY2024 as the figure stood at $132.083 billion at the close of Q4 FY2023.
According to the latest data issued by the State Bank of Pakistan (SBP), 75.02 per cent of the entire debt is attributed to public external debt; the combination of the government’s long-term and short-term external debt, IMF loans to the central bank, and foreign exchange liabilities. The government’s external debt stood at $78.13 billion during Q4 FY2024, reflecting a decrease of 1.52 per cent QoQ, while going down by 2.54 per cent YoY. Within the external debt, the long-term debt by the close of the respective quarter reached at $77.02 billion, down by 1.83 per cent QoQ and 3.81 per cent YoY. Meanwhile, the short-term debt (less than one year) grew by 1020.21 per cent YoY to $1.112 billion as compared to the $99.289 million registered in the same period last year. Statistics further shows that International Monetary Fund (IMF’s) loans to the central bank and federal government stood at $4.036 billion and $4.457 billion respectively during the quarter under review.
The foreign exchange liabilities outstanding during the period under review were registered at $11.71 billion, down by 2.76 per cent QoQ and 1.92 per cent YoY.
Apart from public external debt, the remaining outstanding amount comprises borrowing from public sector enterprises, banks, and the private sector. Outstanding external debt of public sector enterprises (PSEs) clocked in at $7.302 billion, down by 0.67 per cent QoQ and 3.27 per cent YoY. The amount owed to banks stood at $7.204 billion during the review period, in which short-term bank borrowing reached at $2.594 billion, while long term borrowing was registered at $1.3 billion in the quarter under review. Private sector debt, which attributed 9.3 per cent of the total external debt, amounted to $12.183 billion by the close of 1QFY2024, down by 3.35 per cent QoQ and 1.79 per cent YoY.
The last element of the total external debt and liabilities was debt liabilities to direct investors (Intercompany debt) which reached at $6.049 billion. On the other hand, the International Monetary Fund (IMF) has revised cash-strapped Pakistan’s economic outlook, downgrading its projected Gross Domestic Product (GDP) growth for 2025 to 3 per cent, down from 3.2 per cent forecasted just three months ago.
The adjustment comes amid a broader global economic assessment presented in the IMF’s “World Economic Outlook Update: Global Growth Divergent and Uncertain”. The IMF’s revised projections also indicate that Pakistan’s GDP growth will remain at 4 per cent in 2026. However, the latest downgrade reflects ongoing economic challenges in the country, although the IMF did not provide specific reasons for the revision.
In last I would to mention here, the Government of Pakistan’s strategy to reduce its debt burden to a sustainable level includes commitment to run primary budget surpluses, sustain low and stable inflation, promote initiatives that support long-term sustainable economic growth and follow an exchange rate regime based on economic fundamentals.
Additionally, the government is also committed to ensure fiscal discipline by revenue mobilisation and expenditure rationalisation and maintain debt sustainability over the medium term. With a narrower fiscal deficit, public debt is projected to enter a firm downward path while the government’s efforts to enhance maturity structure and expansion of debt instruments-base would assist to meet the financing requirements efficiently.