Pakistan domestic, external debt to witness a substantial increase in FY25
Business
Sources are expecting an addition of Rs10,433bn to the total
ISLAMABAD (Dunya News/Web Desk) – The International Monetary Fund (IMF) and Pakistan are currently also deliberating upon a framework concerning new government borrowings, as both the sources in finance ministry and the Washington-based lender fear an increase in loans in the next budget covering the fiscal year 2024-25.
Read more: More gas tariffs hikes planned as Pakistan eyes another IMF programme
Hence, the sources say that Pakistan could borrow from domestic and external sources another Rs10,433 billion – a massive amount that will propel the total debt burden to Rs87,346bn.
Out of this total, the sources say, domestic borrowing will witness an increase of around Rs7,636bn while external debt can jump by Rs2,797bn in 2024-25.
Thus, the addition of these amounts will raise the total domestic debt to Rs53,878bn and the overall external debt Rs33,648bn.
Previously, it was reported that the government economic team has given an initial estimate of external financing of around $22 billion for the next fiscal year.
Read more: Pakistan external financing needs estimated at $22bn, lower power tariffs proposed for industries
As far as the current fiscal year is concerned, the sources are expecting domestic debt to reach Rs76,913bn by the time 2023-24 ends on June 30, as high interest rates are further worsening the already complicated debt repayment equation for Pakistan.
Read more: Govt bonds are borrowing instruments. High interest rates means more deficit
On the other hand, external debt will jump to Rs30,671bn at a time when Pakistan is trying its best to revive economy amid record high interest rates.
The Pakistani authorities have also shared a macroeconomic framework for the next fiscal year with the IMF mission during the ongoing talks, sources say, with an estimated GDP growth rate of 3.7 per cent and inflation rate dipping to 11.8pc.
Read more: Pakistan sees 2024-25 inflation at 11.8pc, IMF thinks it will be 12.7pc
However, the IMF thinks that the GDP will grow at a slightly lower pace of 3.5pc while inflation is going to stay at 12.7 pc – a projection that is 0.9pc higher than the suggested by the Ministry of Finance.
Earlier this week, the IMF and Pakistan started policy-level talks, as the cash-starved Islamabad is looking forward to clinch another deal with the Washington-based lender while meeting all the tough conditions being attached to it.
