External debt surges to $50.85 billion

[Naveed Yaseen]

By Mushfiq Ahmad
KARACHI: Pakistan’s external debt and liabilities surged to $50.85 billion during the second quarter of current fiscal year from $45.50 billion, according to official data.

The main contributor to this rise in foreign debt was $3.1 billion obtained from International Monetary Fund in November.

Debt owed to IMF rose from $1.239 billion to $4.352 billion during this period.

Foreign debt and liabilities have risen by $15.01 billion during last three and a half years from $35.834 billion at the end of June 2005.

Economists say the annual debt payments would increase as a result of this surge in external debt and liabilities. They say the actual cause of concern would be the annual debt payments that the country would have to make.

This sharp increase in external debt and liabilities shows that the country has failed to get rid of the whooping debt trap despite the favourable conditions that it had following the 9/11 incidents in the United States and despite the assistance it has extended to the US in its “war on terror”.

Pakistan’s foreign debt servicing bill has inflated during the first two quarters of current fiscal year, creating serious problem for the dollar-starved country.

From July to December 2008 the country has already paid bills for debt servicing equal to 77 per cent of what it paid in all four quarters of 2007-08.

The official data shows that the country paid $2.260 billion as debt servicing during the six months. If the payment for liabilities servicing is included the total debt and liabilities services will go further higher to $2.426 billion. During 2007-08, Pakistan’s debt repayment had stood at $2.923 billion.

The country is eagerly looking for more loans to meet its ever-increasing current account deficit but the piling up of loans means larger share of debt servicing as reflected by the data during the last two quarters.

Advisor to government on finance Shaukat Tareen recently stated that government would be seeking $4.5 billion more funds from IMF in near future. This would push the foreign debt further up.

http://www.dailytimes.com.pk/default.asp...2009_pg5_5