Pakistan to Spend Rs3.9 trillion to pay mark-up on Debt
Nearly half of Pakistan’s budget will go to paying interest on domestic and foreign debt totalling Rs 3.9 trillion in the upcoming fiscal year 2022-23.
In the current fiscal year, the government has allocated Rs 3.059 trillion for mark-up payments on domestic and foreign debt.
According to revised estimates, actual payments amounted to Rs 3.143 trillion in mark-up payments on domestic and foreign debt in the current fiscal year.
The government plans to spend Rs3.95 trillion on interest payments on domestic and foreign loans during the next financial year, of which Rs3.43 trillion will be a mark-up on domestic debt and Rs510.97 billion on foreign debt.
For the outgoing year, Rs3.05 trillion had been earmarked to pay a mark-up on foreign and domestic loans, but the target was later revised upwards to Rs3.14 trillion.
As a result of the massive debt servicing requirements, economists believe that pressure will mount on the country’s foreign currency reserves.
Economic assistance
Budget documents estimate external receipts for the fiscal year 2022–23 at Rs. 3.12 trillion. The government has projected project loans of Rs269.2 billion and programme loans of Rs722.3 billion.
In the previous financial year, the government anticipated an inflow of Rs2.69 trillion in external loans, but now it expects receipts of Rs2.96 trillion based on revised estimates.
Rescheduling Debt Agreements: Govt Creates $4b fiscal space
The government had anticipated project loans of Rs 259.94 billion. However, it expects to receive Rs 245.016 billion in the current fiscal year.
Previously, it planned to receive Rs 438.9 billion in program loans. However, it expects to receive Rs 1466 billion during the current financial year.
For the fiscal year 2021-22, the government planned to borrow Rs 496 billion from the IMF. Pakistan has not received any funds to date and there are no projections for the next fiscal year.
In the current financial year, Pakistan did not expect to receive any money from Saudi Arabia in relation to the deferred oil payment facility.
Saudi Oil Payment Facility
As of now, however, it is projected to make use of Rs 70 billion in deferred oil payments for the current fiscal year and Rs 148.8 billion worth for the next fiscal year 2022-23.
In the outgoing year, the government had estimated receiving Rs160 billion from the Islamic Development Bank, against which it received Rs232.2 billion. Pakistan anticipates receiving Rs 223.2 billion during the next fiscal year.
In the next financial year, the government has projected Rs 372 billion to raise through the issuance of Sukuk (Islamic bonds) and Eurobonds.
The government had also expected to generate Rs 560 billion through the issuance of Sukuk (Islamic bonds) and Eurobonds. It received Rs 342.5 billion, according to revised budget estimates.
The government had also expected to generate Rs779.2 billion from commercial banks in the ongoing financial year. It received Rs 821.9 billion, according to revised budget estimates. The government expects to receive Rs 1389.7 billion in the next financial year.
