Pakistan needs over $100bn for external debt payments over 5 years

Pakistan's external debt maturity from fiscal year 2024-2025 (FY25) to FY29 is estimated to be over $100 billion, Director General (Debt) Mohsin Mushtaq informed the National Assembly Standing Committee on Finance during an in-camera session on Thursday.

The committee was informed that the country's total public debt was recorded at PKR 71.2 trillion as of end-June, of which PKR 47.2 trillion was domestic debt and PKR 24.1 trillion was external debt, sources told Nukta.

Pakistan needs to make external payments of $18.83 billion this year, $9.23 billion in FY26, $8.71 billion in FY27, $7.68 billion in FY28 and $6.88 billion in FY29. This does not include the repayment of deposits made by friendly countries.

Mushtaq iterated that friendly countries would rollover $12.7 billion in the current fiscal year, including $5 billion from Saudi Arabia, $4 billion from China, $3 billion from UAE and $0.7 billion from Kuwait.

He also revealed that the government had prepared this year's budget at an average policy rate of 17.2%, adding that every 1% decline in the interest rate translates to around PKR 320 billion relief in terms of domestic debt.

Officials also shared that Pakistan's debt-to-GDP ratio has decreased from 75 to 67.2%, but total loans have surged to PKR 71.24 trillion from PKR 62.88 trillion in FY23.

First IMF review

Minister of State for Finance Ali Pervaiz Malik admitted before the parliamentary panel that Pakistan's external account position remains vulnerable despite the latest International Monetary Fund (IMF) program and foreign exchange reserves rising to $9.5 billion.

He further said that the first IMF review will be held six months after receiving the first installment.

Omar Ayub Khan, a member of the parliamentary panel, warned that a "perfect storm is once again imminent when looking at the debt risk".

Hina Rabbani Khar, another member of the committee, said that Pakistan's economy remains in the ICU due to the absence of sustainable economic strategies.

Malik responded that the government is taking necessary steps for ensuring fiscal discipline and consolidation, stabilizing the economy and accelerating growth. This involves introducing structural reforms and stabilization measures such as broadening the tax base, reforming the Public Sector Enterprises (PSEs) and reducing the fiscal deficit.

All these measures are expected to bring stability, leading to gradual reduction in fiscal deficit over next few years, and subsequently reduce the country's reliance on additional debt, he added.