Pakistan Reeling Under Debt Burden

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Pakistan’s external debt and budget deficit are rising alarmingly. If there is any delay in the US releasing $1.3 billion committed under the Coalition Support Fund (CSF) Pakistan will be pushed into financial problems, Finance Minister Shaukat Tareen says.

The external debt constitutes 27 per cent of the GDP.

The International Monetary Fund (IMF) estimates the analysis is based on the forecast that the external debt stock which stands at 27 per cent of the GDP that Pakistan’s total external debt will go up by more than 43 per cent over the next five years, to about $73 billion in 2015-16.

The debt will increase by about 13 per cent, or $6.4 billion, to $57.1 billion by the end of the current fiscal year and is estimated to increase by $7 billion, or 12.3 per cent, to $64 billion by the end of the next fiscal year, the IMF said in a recent report.

The public and publicly guaranteed debts, including IMF loans, are estimated to increase by 45 per cent from $47.26 billion on June 30, 2009, to more than $68.1 billion in 2015-16. The amount will increase to $53.3 billion during the current fiscal year and $59.9 billion by end of next year, Khaleeq Kiani writes in The Dawn (Jan 11, 2010).

Pakistan’s total medium- and long-term debt stood at about $41.5 billion at the end of June last year. It is expected to go up to $48.2 billion next year and reach $67.6 billion in 2015-16 – an increase of about 40 per cent.

Lions’ share of the debt is to the Asian Development Bank, followed by the World Bank.

ADB’s share will increase from $9 billion in July last year to about $15.8 billion in 2015 – a 75 per cent plus increase in five years.

The World Bank will see its debt share go up by about 29 per cent -$12 billion to $15.5 billion by 2015.

IMF experts aver that Pakistan’s bilateral debt also will see a substantial increase- an estimated 96 per cent from $16 billion now to $31.28 billion in 2015-16.

Though alarming, this level of external debt is sustainable for Pakistan and debt surviving will remain manageable, according to the IMF analysts, who forecast a GDP growth rate of three percent for this year, four per cent next year and 5.5 per cent in 2015-16.