ISLAMABAD: The decision of foreign commercial banks not to roll over their maturing debt caused Pakistan’s external public debt to decrease by $4.7 billion over the past year and stand at $97.5 billion. Nevertheless, this gain did not transfer into meaningful benefits due to the sharp currency devaluation.
According to the State Bank of Pakistan (SBP), the government’s external debt raised to Rs17.9 trillion from Rs14.8 trillion regardless of the external public debt reduction last year. However, due to a 28.3% currency devaluation, there was a rise of Rs3.1 trillion in rupee terms.
The statistics were made public by the central bank on the day that Finance Minister Ishaq Dar left for the United Arab Emirates (UAE), where he planned to discuss the idea of selling state assets and removing obstacles to bilateral loans from the Gulf country.
Finance Minister Ishaq Dar left for the United Arab Emirates (UAE). The visit aimed at exploring the idea of selling state assets. Additionally to remove hurdles in the way of bilateral loans by the Gulf nation. Furthermore, the central bank released the figures on the same day when Dar departed for UAE.
Pakistan needs firm commitments from China, Saudi Arabia, and the UAE. These commitments are critical to requesting an early board meeting of the International Monetary Fund (IMF) for $1.1 billion loan tranche approval.
Due to currency depreciation, the government required Rs. 28 extra for every dollar it had to repay to foreign creditors. The rupee-dollar parity was Rs226.47 at the end of December 2022. The ratio has gotten worse over the preceding 1.5 months and will be reflected in the next debt bulletins.
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