Pakistan on the verge of bankruptcy, debt increased to Rs 62.46 trillion in the first quarter

Pakistan is on the verge of bankruptcy. In the first quarter, its debt has increased by Rs 12 trillion. Loans and liabilities for July-September in the financial year 2022-2023 are Rs 62.46 trillion as against Rs 50.49 trillion in the same period in the previous financial year.

In the financial year, 2022-2023, loans and liabilities in July-September stood at Rs 62.46 trillion, higher than Rs 50.49 trillion in the same period last fiscal. The country’s debt increased to Rs 59.37 lakh crore, while total liabilities increased by 23 per cent to Rs 3.56 lakh crore. 

Why did the debt increase

Fahad Rauf, head of research at Ismail Iqbal Securities, said the increase in debt was mainly from external sources. This includes the IMF loan tranche of US$ 1.2 billion and the impact of rupee depreciation on overall external debt. 

18.7 percent increase in domestic debt

According to The News International, the government’s domestic debt increased by 18.7 percent to Rs 31.40 lakh crore. According to State Bank of Pakistan (SBP) data, external debt stood at Rs 17.99 trillion in the July-September fiscal year 2023, up 30.2 percent from a year earlier. Total external debt and liabilities increased by 33.4 per cent to Rs 28.94 lakh crore. 

“Management of debt obligations is one of the biggest challenges before the government,” said Mustafa Mustansir, head of research at Taras Securities. However, there are concerns about the conclusion of the ninth review of the IMF bailout package. 

Concerns among foreign investors

The delay in the IMF review is making foreign investors more worried, reports The News International. Meanwhile, Pakistan’s risk of default as measured by the five-year currency default swap (CDS) index rose 4.2 per cent to a new high of 64.2 per cent on Monday. As reported by The Express Tribune, Pakistan did not have the resources to meet rising import payments and repay foreign loans on time. 

Pakistan has more than enough foreign exchange reserves

State Bank of Pakistan (SBP) governor Jameel Ahmed has said that Pakistan has ‘foreign exchange reserves of over US$ 9 billion, which is more than sufficient’ to pay for imports and repay foreign debt. 

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