ISLAMABAD, APR 15 (DNA) — The Ferozepur Road Industrial Association (FRIA) senior vice chairman has said that the country is in the middle of a deep economic crisis amid interest rates hikes and soaring inflation with its major debt sustainability indicators witnessing marked deterioration.  Shahbaz Aslam said that amid the crippling economic crisis, the govt will have to return $77.5 billion as external debt in the next three years.

 Quoting the media reports, he noted that a major portion of the $77.5 billion is owed to China, and has to be paid in June when a $1 billion Chinese SAFE deposit and a roughly $1.4 billion Chinese commercial loan would mature. The FRIA SVC stated that the total public debt and liabilities of the country has presently been standing at Rs68 trillion in FY22-23, expressing the fear that it would go up further by Rs11.8 trillion in the current fiscal year.

He pointed out that the total public debt and liabilities would go up manifold mainly because of the rising fiscal deficit and it is estimated that fiscal deficit would escalate by Rs8.227 trillion for the current fiscal year, equivalent to 7.8 percent of GDP. He said that the government will have to manage budget financing to the tune of Rs7.5 trillion through domestic avenues and only Rs1 trillion would be made available as budgetary support from foreign avenues.

The subsidies amount was kept unchanged at Rs1.39 trillion for the current fiscal year although the government had so far released only Rs2.5 billion during the first quarter of the current fiscal year. The defence spending was also kept unchanged at Rs1.8 trillion for the current fiscal year.

On the fiscal side, the IMF and Pakistani sides agreed to slash the development spending at federal and provincial levels.

 At the federal level, the development spending was reduced from Rs843 billion to Rs782 billion for the current fiscal year. The government had allocated Rs950 billion for PSDP projects in the current fiscal year. For provincial level development programs, the IMF has projected reduction from Rs1,440 billion to Rs1,325 billion for the current fiscal year. On the revenues side, the FBR’s target was kept unchanged at Rs9.415 trillion for the current fiscal year.

On non-tax revenue side, the IMF and Pakistan agreed to jack up collection on petroleum levy from Rs869 billion to Rs918 billion for the current fiscal year. A report showed that Pakistan’s share of external debt in the total public debt rose from 37% in June to 37.2% by December, heightening the currency risks simultaneously with the rupee sinking and foreign countries shying away from extending loans.

Further problematic is the fact that with a population of nearly 230 million may be unable to meet its external debt obligations – which will trigger a sovereign default, the USIP analysis said.

According to the debt bulletin, in dollar terms, Pakistan’s total public debt stood at USD 233 billion by December, including USD 86.6 billion in external public debt. — DNA