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Business News/ News / World/  Pakistan's economic crisis gets worse; external debt surges by 38%
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Pakistan's economic crisis gets worse; external debt surges by 38%

The rise in debt could be attributed to massive devaluation in the local currency against the US dollar

Pakistan's economic crisis (AP)Premium
Pakistan's economic crisis (AP)

Pakistan's economic crisis is getting worse with every passing day. As per the latest report, the country's external debt rose sharply by 38% to PKR 20.69 trillion by the end of January 2023 as compared to the year-ago period.

The pkrevenue report mentioned that the State Bank of Pakistan (SBP)'s external debt was PKR 14.98 trillion in 2022 January.

The report said the rise in debt could be attributed to massive devaluation in the local currency against the US dollar.

The local unit recorded a decline of 51% to the greenback as the exchange rate by the end of January 2023 was PKR 267.94 as against PKR 176.74 by end of January 2022.

Pakistan's government's overall debt jumped to PKR 54.94 trillion by end of January 2023. Domestic debt has increased to PKR 34.26 trillion by end of January 2023. While the long-term loans of the country increased to PKR 27.51 trillion.

Further, the pkrevenue mentioned that the debt has increased to PKR 24.44 trillion as compared with PKR 18.05 trillion a year ago. While foreign currency loans climbed up to PKR 11.3 billion as against PKR 7.5 billion.

Meanwhile, cash-strapped Pakistan has communicated to the IMF that it has requested China to roll over its $2 billion deposits for another year as the country awaits a much-needed $1.1 billion tranche of funding from the global lender.

Pakistan's finance ministry and State Bank of Pakistan (SBP) shared their external financing plan in virtual talks with the IMF to strike a staff-level agreement with the Washington-based lender.

Pakistan communicated to the IMF its plans to raise its dwindling foreign exchange reserves to $10 billion by the end of June.

The total Chinese SAFE deposits stood at $4 billion, and the remaining are due to mature in a few months.

Pakistan informed the IMF about implementing various measures on the Fund's request for the release of the $1.1 billion tranches under the $7 billion loan facility.

It suggested that both sides should now move towards signing the staff-level agreement (SLA) without wasting further time.

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Published: 08 Mar 2023, 10:49 AM IST
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