8

PublicDebt

RecentdevelopmentswithregardtothesovereigndebtsituationofcountriesrangingfromIcelandto
theUnitedArabEmirates,andmorerecently,ofcountriesintheEurozone,mostprominentlyGreece,
havebeenarudeawakeningforglobalfinancialmarkets.Afteraprotractedperiodofbenignneglect,
policymakers as well as investors are beginning to scrutinize more carefully the health of sovereign
publicfinances.
Lessons from previous debt crises are being relearnt. Escalating public debt does not bode well for
macroeconomic stability and growth as it exerts upward pressure on interest rates and crowdsout
domestic private investment. For developing countries, the higher interest cost associated with
domestic debt places a substantial strain on budgetary resources, with a negative spillover effect on
social sector and development outlays and a slowdown in growth momentum. For external debt,
creditorsmaychargealowerinterestrate(asisthecasewithmostmultilateralandbilateraldonors),
but the exchange rate risk inherent in the accumulation of foreign currency debt leaves a country
vulnerable to developments on the external account and in international markets. Therefore,
policymakersarefacedwithchoicesnotonlyofwhatlevelsofpublicdebttoaccumulate,butalsothe
compositionoftheportfoliowithregardstosource,availability,costsandriskswhichareconsistentwith
thegovernmentsmediumtermfiscal,monetary,andexchange(externalaccount)priorities.

90

Fig-8.1: Emerging Market Countries: Gross Government Debt, 2010

( in % of GDP)

80

Pakistan
70
60

EMCAverage

50
40
30
20
10

Chile

Russia

Saudi Arabia

China

Bulgaria

Belarus

Peru

Indonesia

Romania

Emerging EUR

Ukraine

Colombia

South Africa

Croatia

Mexico

Emerging Asia

Thailand

Turkey

Malaysia

Emerging LAC

Poland

Argentina

Pakistan

Brazil

Hungary

India

Source:IMFWEODatabase

In the aftermath of the global financial crisis and economic slowdown, most countries have acquired
109

EconomicSurvey200910

substantial amounts of debt as a result of large budgetary outlays and fiscal stimulus targeted at
addressing the hardest hit economic sectors, instilling confidence in markets, and reviving overall
economicactivity.Byaugmentingalreadyhighlevelsofpostcrisispublicdebt,mostcountriesnowface
a daunting challenge in dealing with increased debt burdens. The problem is more pronounced in
developedcountries,specificallyintheEurozone.Fiscaldeficitsinadvancedeconomieshaveincreased
toapproximately9percentofGDP1.DebttoGDPratiosintheseeconomiesareexpectedtoexceed100
percent of GDP in 2014 based on current policies, some 35 percentage points of GDP1 higher than
beforethecrisis.Bycontrast,thepublicdebtaccumulationinemergingeconomieshasbeenlower,with
publicdebtratiosofapproximately30to40percentofGDPintheseeconomies(SeeFig8.1).Giventhe
highereconomicgrowthinemergingeconomiesledbystrongdomesticdemand,thereisamplefiscal
spacetoplacethedebtburdensonadecliningpathwithrelativeease.
Althoughsomewhatinsulatedfromthefinancialcrisis,Pakistantoohaswitnessedariseinpublicdebtin
therecentpast.Fiscalprofligacyintheshapeoflargesubsidies,policyinactionwithregardstorisingoil
prices in 2007, weak revenue collection, pressure on budgetary resources placed by a heightened
securitysituation,andeffortstoeliminatetheintercorporatedebtintheenergysector,haveledtoa
relativelyrapidincreaseinpublicdebt.ThecumulativeeffectofthedepreciationoftheRupeeagainst
the US dollar, on the one hand, and the weakness of the US dollar against third currencies (including
Special Drawing Rights, SDR) in which a significant portion of Pakistans external public debt is
denominated,havealsoplayedasubstantialpartintheoverallincrease.
Based on projections for the end of FY10, Pakistan has one of the highest public debttoGDP ratio
amongstemergingeconomies(asshowninFig8.1).However,policyresponsesinFY10,awithdrawalof
pressure on the external account and a relatively stable exchange rate, in addition to a limit on
borrowing from the central bank have all helped stem the rapid increase of public debt witnessed in
FY09.
8.11OutstandingPublicDebt
ThedefinitionofpublicdebtusedintheEconomicSurveyofPakistanisinconformitywithinternational
conventions.TotalPublicDebt(TPD)includesdomesticdebtpayableinPakRupeeaswellastheshort,
mediumandlongtermPublicDebtportionofExternalDebt&Liabilities(expressedinRupeeterm).In
addition, funds obtained from International Monetary Fund (IMF) for the purpose of budgetary
financinghavealsobeenincludedfromthecurrentfiscalyear.Thestockofpublicdebtdoesnotinclude
the debt and liabilities of the central bank, which includes financing for balance of payment (BoP)
support. Further, publically guaranteed debt and government guarantees issued for commodity
operationsarealsonotincluded.
Usingthisstandarddefinition,TotalPublicDebt(TPD)postedagrowthof12.2percentduringthefirst
nine months of the current fiscal year and reached Rs. 8,160 billion at the end of March 2010. This
increase in the stock of public debt is significantly lower than the rapid increase of 22 percent in the
previousfiscalyear.
ThedomesticcurrencycomponentincreasedbyRs.631billionor16.3percenttoendatRs.4,491billion
in comparison to Rs. 3,860 billion of endJune 2009. This increase accounted for 71 percent of the
aggregateincreaseinTPD.Ontheotherhand,therewasanadditionofRs.253billioninthestock of

World Economic Outlook, April 2010, International Monetary Fund

110

PubliccDebt

foreigncu
urrencydebtwhichmakessuptheremaaining29perccent.Itisinteerestingtono
otethatincon
ntrast
to FY09, the
t increase in the stock of TPD during the current year has mostly
m
been through dom
mestic
sources.A
Arelativelysttableexchanggerate,appreeciationofthedollaragain
nstothermajjorcurrenciess,and
limited acccess to multtilateral and bilateral deb
bt creating flo
ows has neceessitated thiss shift in finaancing
mix.Publiicdebtisincrreasinglycom
mposedofdomesticcurrencydebt,theeshareofwh
hichhasrisenfrom
53percen
ntasofendJu
une2009to5
55percentinMarch2010..

Table8.1:PublicDebt

DomesticC
CurrencyDebt
ForeignCu
urrencyDebt
TotalPubliicDebt

DomesticC
CurrencyDebt
ForeignCu
urrencyDebt
TotalPubliicDebt

DomesticC
CurrencyDebt
ForeignCu
urrencyDebt
TotalPubliicDebt

DomesticC
CurrencyDebt
ForeignCu
urrencyDebt
Memo:
ForeignCu
urrencyDebt(inUS$Billion)
ExchangeR
Rate(Rs./US$,E.O.P)
GDP(inRs.Billion)
TotalRevenue(inRs.Billion)
*Asofend
dMarch,2010

FY05

FY06

FY07
FY08
(Inbillion
nsofRs.)
2337
2610
3275
1973
2140
2705
4310
4750
5980
(Inpercen
ntofGDP)
30.7
30.1
32.0
25.9
24.7
26.4
56.5
54.8
58.4
(Inpercento
ofRevenue)
217
201
218
183
165
180
400
366
399
(Inpercento
ofTotalDebt)
54.2
54.9
54.8
45.8
45.1
45.2

2178
1856
4034
33.5
5
28.5
5
62.1
1
242
2
206
6
448
8
54.0
0
46.0
0
31.1
1
59.7
7
6500
900
0

FY09

FY
Y10*

3860
3417
7277

4491
4
3
3669
8
8160

30.3
26.8
57.1

30.6
3
2
25.0
5
55.6

209
185
393

208
2
170
3
379

53.0
47.0

55.0
5
4
45.0

32.8
35.3
40.2
42.2
4
43.5
60.2
60.6
67.3
81.0
8
84.4
7623
8673
10243
12739
14
4668
1077
1298
1499
1851
2
2155
Source:EAD
D,BudgetWing
g,MoFandDPCOstaffcalcullations

Thedryingupofexterrnalfunding sourceshas putahaltto therapidlyiincreasingexpansioninfo

oreign
debt. As most of the foreign currrency loans are
a project based,
b
limited
d capacity to
o deliver on these
projects has resulted in unutilized lending piipelines of existing
e
comm
mitments. Th
his has madee the
disbursem
ments under the IMF SBA
A program mo
ore visible du
uring the firstt three quartters of 200910. It
shouldbeenotedhere thatonlyap
portionoftheelasttwotran
nches(US$1,,083million) hasbeenuseedfor
budgetaryyfinancingan
ndhence,con
nstitutesapaartoftheforeeigncurrencyycomponentofTPD.Whilethe
remainingg funds received from IM
MF are reflectted on the baalance sheet of the centrral bank (SBP
P) and
hence, do
o not come under
u
the am
mbit of publicc external deebt. The SBA has primarilyy been securred to
support the
t Balance of Paymentss position byy supplementting the foreeign exchange reserves of
o the
country.
OutoftheetotalincreaaseinTPD,Rss.148billion or17
percent is
i attributed
d to depreciiation of naational
currency againsttheU
UnitedStatessDollardurin
ngJuly
2009Marrch2010asP
PKRlost4.2p
percentofits value
duringthiisperiod.Thisimpactofdepreciationo
onthe
publicdeb
btstockhasb
beenmutedinthecurrenttfiscal

Table8.2:Translatio
onalImpactonP
PublicDebt,FY1
10
Currrency
Rs.Biillion
PKRvs.Dollar
14
48
Dolla
arvs.ThirdCurreencies
9..3
NetImpact
138
8.7
*AsofendMarch2
2010 Source:DP
PCOstaffcalcula
ations

111

EconomicSurvey200910

yearasopposedto20percentdepreciationofthedomesticcurrencyin200809.However,appreciation
ofthedollaragainstmajorinternationalcurrenciescausedatranslationalgain(reductioninstockdueto
exchange rate movement) of US$ 111 million or Rs 9.3 billion in the outstanding stock of foreign
currencypublicdebt.ThenetimpactofcurrencymovementsonTPDforthefirstthreequartersofFY10
stood at Rs 138.7 billion. Fig 8.2 depicts the net impact of translational losses on account of Rupee
depreciationagainstthedollar,andmovementsofthedollaragainstotherinternationalcurrenciesfrom
FY00FY10.Onacumulativebasis,exchangeratelossesamounttoRs1605billionor20percentofthe
current outstanding stock of TPD2. Losses during FY08 and FY09 were significantly higher, owing to a
combinationofalossinvalueoftheRupee,aswellasaweakeningdollarininternationalmarkets.
Fig8.2:NetTranslationalImpactonTotalPublicDebtFY00FY10*
600

Rs.Billion

500
400

CumulativeLossesFY00FY10:
Rs. 1605billion

300
200
100
0
FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10
*:AsofendMarch 2010

Source:DPCOStaffCalculation

The quantum of increase on the domestic front in the first nine months of 200910 is nevertheless
alarming. The resurgence of SBP borrowing in the last two months of the third quarter has been the
principal source. However, with the governments commitment to adhere to net zero quarterly
borrowinglimits,thisrisingtrendinthestockofcentralbankdebtisexpectedtostabilizebytheendof
this fiscal year. The shortfall in undisbursed amounts of foreign currency debt was met by a heavy
relianceondomesticbankandnonbanksources.Thegovernmentwasabletoaccessthedebtcapital
markets due to favourable current environment and interest rates. As a result, healthy investment in
government securities and sizeable accruals in major NSS instruments accounted for much of the
increaseinRupeedebt.
8.12ServicingofPublicDebt
Servicing on public debt has aggregated to Rs. 640.2 billion at endMarch 2010. As percent of the
projectedGDPfor200910,thepublicdebtservicingisnow4.4percent.InterestpaymentsofRs.428.5
billionhavebeenincurredondomesticdebt,whereasRs.45billionofthepaymentwasonaccountof
foreign debt. Huge repayments of about Rs. 166.7 billion were made to retire the maturing foreign
currencydebt.Almost46percentofthegovernmentrevenueshavebeenusedtoserviceinterestand
principalpaymentsonpublicdebtduringJuly2009toMarch2010.

Note: Due to unavailability of detailed data the currency composition is assumed to be constant for years before 2007.

112

PublicDebt
Fig8.3:PublicDebtServiceas%ofTotalRevenue
FY05FY10*
50%
40%
30%
20%
10%
0%
FY05

FY06

FY07

FY08

FY09

FY10

Source:DPCO

*:Asofend March2010

Table8.3:PublicDebtServicing,July'09March'10

(inbillionsofRs.)
InterestPayments
473.5
InterestonDomesticDebt
428.5
InterestonForeignDebt
45.0
RepaymentofForeignDebt
166.7
PublicDebtServicing
640.2

(inpercentofGDP)
InterestPayments
3.2
InterestonDomesticDebt
2.9
InterestonForeignDebt
0.3
RepaymentofForeignDebt
1.1
PublicDebtServicing
4.4

(inpercentofRevenue)
InterestPayments
33.8
InterestonDomesticDebt
30.6
InterestonForeignDebt
3.2
RepaymentofForeignDebt
11.9
PublicDebtServicing
45.7
Source:BudgetWing,MoF

As GDP growth does not necessarily translate into a

proportionate increase in revenues, the burden
placed by public debt service obligations on
government resources is more aptly measured by
publicdebtserviceasapercentageofgovernmentrevenues.Weakgrowthinrevenuecollectionanda
fasterrateofaccumulationofdebtduring200708ledtoasharpincreaseinpublicdebtservicingasa
percentageoftotalrevenuesinthefollowingyear.Servicingofpublicdebtamountedto47percentof
total revenues during FY09. However, a subsequent reduction in the pace of debt creation and a
marginaleasinginmonetarypolicystancehaveseenthisindicatorfalltoapproximately46percentin
thefirstthreequartersofFY10.
8.13DynamicsofPublicDebt
OwingtoarevisionintheGDPgrowthforthelasttwoyears,theTPDtoGDPratiohasbeenadjustedto
58.4 percent and 57.1 percent in 200708 and 200809 respectively. For 200910, this ratio in
percentagetermsrestedat55.6percentasofMarch31.Theratiohasdeclinedby1.5percentagepoints
from the previous fiscal year, which has mainly been achieved on account of slowmoving external
inflows.Intermsoftotalrevenues,publicdebtasofendMarchhasimprovedslightlyto3.8times,from
3.9 times in 200809. In real terms, the growth of public debt has been fairly restrained, following a
spikeinFY08.9.7percentgrowthinrealtermswitnessedinFY08,coupledwithnegativerealgrowthof
revenues,ledtoadrasticincreaseinthecountrysdebtburden.
Table8.4:DynamicsofPublicDebtBurden,FY05FY10*
Year
GDPDeflator
Fiscal
Primary
Balance
Balance
FY05
7.7%
FY06
7.0%
FY07
10.5%
FY08
16.2%
FY09
20.3%
FY10
10.1%
*:AsofendMarch2010

3.3%
4.3%
4.3%
7.6%
5.2%
5.1%

1.3%
2.3%
1.5%
2.8%
0.3%
0.5%

RealGrowth
ofDebt[A]
1.7%
0.1%
0.3%
9.7%
1.4%
2.1%

RealGrowthof
Revenue[B]

RealGrowthof
DebtBurden
[AB]
5.7%
7.3%
12.6%
12.8%
10.1%
10.4%
0.7%
10.4%
3.1%
1.8%
6.3%
4.3%
Source:DPCOStaffCalculations

113

EconomicSurvey200910

AsshowninTable8.4,effortstodecreasethefiscaldeficithavepaiddividendintheformoflowerreal
growthofdebt.Further,positiverealgrowthinrevenuesaboveandbeyondthegrowthindebtduring
theFY09andFY10hastranslatedtoarealreductioninthedebtburden.Itmustbenotedhowever,that
thedecelerationintherealgrowthofdebtwasalsoinfluencedbyveryhighlevelsofinflationwitnessed
inFY09.AsinflationarypressuresintheeconomywerefairlylowerinFY10,therealgrowthindebthas
begun to increase marginally. During the first nine months of the current year, total public debt
increasedby2.1percentinrealterms,whereasendofyearrevenuecollectionisprojectedtogrowby
6.3percent;leadingtoadeclineinthedebtburdenofapproximately4.3percent.

Calculation of real (inflationadjusted) cost of Table8.5:RealCostofBorrowing

Year
External
Domestic
Public
borrowing reflects not only the interest paid on
Debt
Debt
Debt
outstanding debt, but also the price levels and
(inpercent)
exchange rate movements and their impact on the
FY05
4.1
0.8
2.3
portfolio. Historically, external debt has been a
FY06
4.8
1.1
1.6
cheaper source of borrowing for Pakistan. However,
FY07
4.4
5.8
1.1
rupee depreciation against the dollar has had a
FY08
3.3
4.5
4.0
FY09
3.4
3.7
0.5
massive impact on the cost of external debt in
FY10*
5.7
0.2
2.6
various years. The real cost of borrowing from
*:AsofendMarch2010
Source:DPCOstaffcalculations
externalsources,whichisusuallynegative,increased
toashighas3.4percentinFY09owingmostlytotheRupeelosing20percentofitsvalueagainstthe
dollar.Witharelativelystableexchangerate,andtheconcessionalnatureofPakistansexternalloans,
thecostofborrowingforFY10stoodat5.7percentinrealterms.Thecostofborrowingfromdomestic
sourceshasincreasedto0.2percentinthefirstthreequartersofFY10;however,thisincreaseispartly
influencedbylowerinflationarypressuresascomparedtoFY09wherethecostfromdomesticsources
was3.7percentinrealterms.
8.2DomesticDebt
In order to bridge the gap between revenue and expenditure on a governments balance sheet,
sovereigns all over the globe rely on debt creating flows, both external and internal. The foreign
currency component of financing generally depends on factors beyond the reach and control of
governments whereas the domestic sources can be approached at all times, even though at a higher
cost.Theprimeexampleinthiscaseisborrowingfromthecentralbank(referredtoasseignorage,or
deficitmonetisation).
AsforPakistan,stagnantexternalflowshaveimpliedahigherrelianceondomesticfundingsources.The
absenceofefficientandliquiddebtcapitalmarketshasmeantthatthegovernmenthasbeencompelled
towards deficit monetization, which runs counter to its stated aim of improving further the debt
dynamicsofthecountry.Thevulnerabilityofdebtservicechargestointerestratevariationsincreases
withthepilingupofshortermaturitiesindomesticdebt.Additionally,extensivegovernmentborrowing
mayinduceinflationthroughtheexpansionofmoneysupply.
Despite the dangers of excessive reliance on domestic debt, it is important to note that government
borrowing through domestic sources is vital in stimulating investment and private savings, as well as
strengtheningdomesticfinancialmarkets,sinceitprovidesdepthandliquiditytothemarkets.

114

PublicDebt

8.21OutstandingDomesticDebt
Domesticdebt isbroadly classifiedas permanent,floatingand unfundeddebt.Asofend March2010,
theoutstandingstockofdomesticdebtstoodatRs.4,490.7billion(SeeTable8.6).Duringthefirstnine
months of the current fiscal year 200910, Rs. 630.8 billion was added to the stock that yielded an
overallgrowthof16.3percentinthedomesticdebtportfolioofthecountry.ThedomesticdebttoGDP
ratioroseto30.6percentbyendMarch2010,anincreaseof0.3percentagepointsoverendJune2009,
inresponsetorelativelystablenominalGDPgrowth.
Table8.6:OutstandingDomesticDebt,FY05FY10*

FY05
FY06
PermanentDebt
FloatingDebt
UnfundedDebt
Total

PermanentDebt
FloatingDebt
UnfundedDebt
Total

PermanentDebt
FloatingDebt
UnfundedDebt
Memo:
GDP(inbillionofRs.)
*:AsofendMarch2010

526.3
778.2
873.2
2,177.7

514.9
940.2
881.7
2,336.8

8.1
12.0
13.4
33.5

6.8
12.3
11.6
30.7

24.2
35.7
40.1

6,499.8

22.0
40.2
37.7

7,623.2

FY07
FY08
(inbillionsofRs.)
562.7
616.9
1,107.6
1,637.4
940.0
1,020.3
2,610.3
3,274.6
(inpercentofGDP)
6.5
6.0
12.8
16.0
10.8
10.0
30.1
32.0
(inpercentofTotalDebt)
21.6
18.8
42.4
50.0
36.0
31.2

8,673.0
10,243.0

FY09

FY10*

685.9
1,903.5
1,270.5
3,859.9

779.3
2,299.7
1,411.7
4,490.7

5.4
14.9
10.0
30.3

5.3
15.7
9.6
30.6

17.8
17.4
49.3
51.2
32.9
31.4

12,739.0
14,668.0
Source:BudgetWing,MoF

The shortterm nature of domestic debt is evident by an ever increasing share of floating debt in the
total stock. As of endMarch 2010, more than half of the domestic debt is composed of government
debtinstrumentshavingtenorsofayearorlesser.Thecontributionofpermanentandunfundeddebt
hasdecreasedto17.4percentand31.4percent,incomparisontopreviousyearsshareof17.8percent
and32.9percentrespectively.Highdependenceonshorttermdebtleavesthedomesticdebtportfolio
exposedtorefinancingrisk.
8.21(i)PermanentDebt
ThepermanentdebtonaccountofhealthyinflowsinPakistanInvestmentBonds(PIBs)tothetuneof
Rs.52.4billiongrewby13.6percent.AnalmostequaladditionwasjointlycontributedbyPrizeBonds
(Rs. 27.4 billion) and Ijara Sukuk (Rs. 14.4 billion) during the period under review. Meanwhile, the
governmentsuccessfullyretiredthematuringFederalInvestmentBonds(FIBs).
TheStateBankofPakistan(SBP)conductedfourPIBauctionsintheongoingfiscalyearwiththetargetof
Rs. 10 billion per auction. The market participated with vigor surpassing the target in almost every
auction.AlthoughIjaraSukuk(issuedin200809)madeaonetimeappearanceduringtheperiodunder
review, this fairly new instrument mobilized enormous funds from the Islamic market. Such a strong
inputsuggeststheuntappedpotentialofthebuddingIslamicmarketandcallsforacontinuationofthis
initiativeintheyearstocome.

115

EconomicSSurvey200910

(Rs.billion)

Fig8.4:MajorDomesticDebtInsttrumentsFY0
05FY10
4,200
3,900
3,600
3,300
3,000
2,700
2,400
2,100
1,800
1,500
1,200
900
600
300
0

NSS
PIBs
MRTBs
MTBs

FY05

FY06

F
FY07

FY0
08

FY09

FY10

Source:Bud
dgetWing,DPC
COStaffCalculation

Moreoverr, compliance
e with the po
olicy steps taaken in the previous
p
yearr to draw a line between debt
securities maarket.
creation and
a monetarry policy execcution has im
mparted certaainty to the government
g
Thesesteepsincludepublicationof yearlyauctio
oncalendars andtheirpeeriodicalrevission,adheren
nceto
volumebaasedauctionssandthedeccisionofcuto
offyieldsforp
primaryauctiionsbytheM
MinistryofFin
nance.
Going forward, such measures can
c
be the building blo
ocks of a wellintegrated
w
d and articu
ulated
macroeco
onomicpolicyycoveringfisccal,monetaryyanddebtsecctorsoftheeeconomy.
8.21(ii)FFloatingDebtt
Thestockkoffloatingd
debtexperien
ncedthehighestgrowtho
of20.8percen
ntin200910
0(July2009M
March
2010) am
mong the major categoriess of domesticc debt and ended at Rs. 2,299.7
2
billion as of Marcch 31,
2010. Bullk of this increase is attriibuted to hefty net proceeeds from Market
M
Treasu
ury Bills (MTB
Bs) of
aboutRs.311billionfaallingundertheambitoffloatingdebt.Themarketp
preferenceoffgovernmenttdebt
instrumen
nts, owing to
o risk aversio
on and absen
nce of privatee sector cred
dit demand, greatly
g
assistted in
augmentingtheparticipationinMTTBsauctionovverandabovethetargeteedamounts.
Ontheottherhand,ce
entralbankbo
orrowingthro
oughMarketRelatedTreaasuryBills(M
MRTBs)waslim
mited
toRs.85.7
7billiondurin
ngJuly2009ttoMarch201
10,whichisaresultofthegovernmentstargetundeerthe
SBAofpu
ursuingapositionofnetzzeroquarterlyyborrowingffromSBP.Th
hegrowthof 7.5percentiinthe
stockofM
MRTBsduringgthefirstthreeequartersoff200910alb
beithigherthaan5.2percen
ntwitnessedinthe
previousyyearhasundo
oubtedlyreceededfromtheerateofincreeaseof133p
percentrecord
dedin20070
08.
Subduedcreditdeman
ndfromthep
privatesectorhasbeenanunderlyingth
hemeoftheyyearandaprimary
causeofh
hugeincreme
entsincaseo
ofmarketdeb
btinstruments(PIBsand MTBs).Banksspreferredto
olock
inathigheerratesowin
ngtoageneraalperceptionofaninteresstratepeakin
nthemarket.Furthermore,the
lossesborrnebythebaankingsectorronaccount ofnonperformingloanskkeptthemaw
wayfromreso
orting
to the prrivate sector requirementts, even thou
ugh negligible. With the gradual resu
urgence of private
sector creedit demand lately and market
m
expecctation of an interest ratee hike at thee back of renewed
116

PublicDebt

inflationary pressures, banks have started concentrating on the 3months paper. This may disrupt the
ongoingtrendofheavyinvestmentsinMTBsinfuture.
8.21(iii)Unfundeddebt
The unfunded category of internal debt, composed of NSS instruments, has recorded a modest
expansionof11.1percentduringtheongoingfiscalyear(tillMarch2010).SpecialSavingsCertificates
attractedRs.81.7billionfollowedbyBahboodSavingsCertificatesandRegularIncomeScheme.Massive
retirementsinDefenceSavingsCertificatesturnedthenetaccrualtoanegativeRs.35billionduringthe
periodunderreview.
TheCentralDirectorateofNationalSavings(CDNS)launchedtradablebondswiththenameofNational
SavingsBondshavingmaturityof3,5and10yearsinJanuary2010.Thestockofthesebondsstoodat
Rs.3.7billionasofMarch31,2010withanalmost95percentconcentrationinthe3yeartenor.
The NSS contains a number of instruments with similar features, however targeting different market
segments. Out of eight instruments, three schemes have a 3year maturity, four are a 10year
instrumentandtwoarea5yearinstrument.FromtheincrementalborrowingofRs.172billion,Rs.59
billion or 34.6 percent are generated through Pensioners Benefit Account and Bahbood Savings
Certificatescarryingveryhighinterestrates(SeeTable8.7).
Table8.7:NationalSavingsSchemes
Schemes
Maturity
(years)
SavingsAccount
SpecialSavingsAccount
Pensioners'BenefitAccount
DefenceSavingsCertificates
SpecialSavingsCertificates
RegularIncomeCertificates
BahboodSavingsCertificates
NationalSavingsBonds
PrizeBonds
Total

3
10
10
3
5
10
3,5,10

QuotedRate
(inpercent)

Outstanding
Variance
Percentage
ShareinTotal
31Mar10
MarJun
(inpercent)
(inmillionsofRs.)
8.50%
15,568
(538)
0.31%
11.67%
118,400
30,750
17.96%
14.16%
124,043
14,163
8.27%
12.15%
222,156
(35,458)
20.71%
11.67%
341,100
52,150
30.46%
12.00%
125,047
34,045
19.89%
14.16%
352,639
45,105
26.35%
12.50%
3,650
3,650
2.13%
8.50%
224,765
27,325
15.96%
1,527,367
171,191
100%
Source:CDNS,BudgetWing,MoFandDPCOstaffcalculations

TheembeddedputoptioninmostoftheschemesundertheNSSumbrellacanbeapotentialsourceof
severeliquiditycrisisasaprobableratehikewillimmediatelybecapitalizeduponinthepresenceofa
put option facility. Moreover, automatic rollovers, cash accounting and zero coupon in NSS result in
inconsistent fiscal numbers. For instance, the zero coupon DSCs of almost Rs. 80 billion issued in late
1990sdidnotappearinthebudgetuntiltheywerematuredrecentlyinthelastthreeyears,hittingthe
budget by more than Rs. 400 billion. This cost might have been spread during the 10 year tenor, had
there been an accrual accounting practice prevalent in the CDNS in particular and government in
general.
CDNS was established by the government with the intention of mobilizing savings of retail markets,
however,nonbankinstitutionalinvestmenthastraditionallydominatedthiscategoryofunfundeddebt.
These institutional investors also invest in wholesale markets and benefit from the interest rate
117

EconomicSurvey200910

arbitragebetweenthetwomarkets.
8.22DomesticDebtBurden
Interest payments on domestic debt largely reflect the servicing cost on previous stock. The interest
paymentsfortheperiodofJuly2009March2010aggregatedtoRs.428.5billion.
Table8.8:DomesticDebtBurden
Fiscal
(inbillionsofRs.)
Year
Domestic
Interest
Debt
Payments
FY05
2,177.7
176.3
FY06
2,336.8
202.5
FY07
2,610.3
326.9
FY08
3,274.6
442.6
FY09
3,860.5
580.5
FY10*
4,490.7
428.5
*:AsofendMarch2010

Tax Revenue
26.7
25.2
36.7
42.1
48.2
41.6

InterestPaymentsas%of
Total
Total
Current
GDP
Revenue
Expenditure
Expenditure
(mp)
19.6
15.8
18.7
2.7
18.8
14.4
18.1
2.7
25.2
19.5
23.8
3.7
29.5
19.4
23.8
4.3
31.4
22.9
28.4
4.6
30.6
21.1
24.9
2.9
Source:BudgetWing,MoF

Asapercentageofmajormacroeconomicindicators,interestpaymentshavestarteddeterioratingsince
200708.Thisweakeninghasmeantthatpaymentsowingtointerestexpensehaveconsumedamajor
chunk of limited budgetary resources in the past few years. Additionally, this trend indicates that
interestpaymentshaveemergedasthelargestcomponentofcurrentexpenditureinthefiscalaccount.
In continuation of this trend, interest payments on domestic debt in proportion to tax revenue
amountedto41.6percentinthefirstninemonthsof200910.30.6percentofthetotalrevenueshave
beenusedtopayofftheinterestdueoninternaldebt.Similarly,theshareofinterestexpenditureon
domestic currency debt in total and current expenditures has become 21.1 percent and 24.9 percent
respectively.TheratioofinterestpaymentstoprojectedGDPhasdepictedaslightimprovementduring
July2009March2010,decreasingfrom4.6percentin200809to2.9percentasofMarch31,2010(See
Table8.8).
8.3ExternalDebt&Liabilities
Pakistansexternal debtandliabilities (EDL)includeallforeigncurrencydebtcontracted bythepublic
andprivatesector,aswellasforeignexchangeliabilitiesoftheCentralBank.EDLhasbeendominated
bypublicsectorexternaldebtduetoachroniccurrentaccountdeficitandsubstantialforeignfinancing
throughloansfrommultilateralandbilateraldonors.Publicsectorexternaldebtincludesfinancingfor
BalanceofPaymentssupportaswellasforeigncurrencyfinancingofthebudgetdeficit.Debtobligations
of the private sector are fairly limited and have been a minor proportion of EDL. The explicit
concessional terms of loans (low cost and long tenors) contracted with international financial
institutionsordonorcountrieshaveconcealedtheinherentcapitallossassociatedwithforeigncurrency
debt to some extent. On the contrary, after accounting for the exchange rate loss, foreign currency
loans from multilateral and bilateral donors are contracted at a lower rate as compared to domestic
currency debt (an average cost differential of approximately 1.1 percent over the last 19 years).
Consequently, government has historically remained favourable in terms of borrowing through these
channelsgiventhemacroeconomicimportanceofforeignfinancingflowsinPakistan.
8.31OutstandingExternalDebt&Liabilities
During the first nine months of the current fiscal year 200910, Pakistans external debt and liabilities
118

PublicDebt

increasedbyUS$2billionor3.8percent.TheoutstandingstockasofendMarchFY10stoodatUS$54
billionasopposedtoUS$52billionattheendofFY09.Inabsoluteterms,thefirstthreequartersofFY10
havewitnessedthelowestincreaseinthestockofEDLduringthelastthreeyears.
Table8.9:Pakistan:ExternalDebtandLiabilities

1.PublicandPublicallyGuaranteedDebt

A.MediumandLongTerm(>1year)

ParisClub

Multilateral

OtherBilateral

EuroBonds/SaindakBonds

MilitaryDebt

CommercialLoans/Credits

B.ShortTerm(<1year)

IDB
2.PrivateNonGuaranteedDebt(>1year)
3.IMF
ofwhich
CentralGovt.

MonetaryAuthorities
TotalExternalDebt(1through3)

(ofwhich)PublicDebt
4.ForeignExchangeLiabilities
TotalExternalDebt&Liabilities(1through4)

(ofwhich)PublicDebt
OfficialLiquidReserves

TotalExternalDebt(1through3)
1.PublicandPublicallyGuaranteedDebt

A.MediumandLongTerm(>1year)

B.ShortTerm(<1year)
3.IMF
4.ForeignExchangeLiabilities
TotalExternalDebt&Liabilities(1through4)
OfficialLiquidReserves
Memo:
GDP(inbillionsofRs.)
ExchangeRate(Rs./US$,PeriodAvg.)
ExchangeRate(Rs./US$,EOP)
GDP(inbillionsofUSdollars)

*:endMarch'10

FY05

FY06

FY07

31.1
30.8
13.0
15.4
0.8
1.3
0.2
0.2
0.3
0.3
1.3
1.6

32.8
32.6
12.8
16.8
0.8
1.9
0.1
0.2
0.2
0.2
1.6
1.5

35.3
35.3
12.7
18.7
1.0
2.7
0.1
0.1
0.0
0.0
2.3
1.4

1.6
34.0
31.1
1.4
35.4
32.1
9.8
31.1
28.4
28.1
0.2
1.5
1.3
32.3
9.0
6,500
59.4
59.7
109.5

(InbillionsofU.S.dollars)
FY08
FY09
FY10*

40.2
42.2
42.4
39.5
41.6
41.8
13.9
14.0
14.0
21.6
23.1
23.2
1.2
2.0
2.5
2.7
2.2
1.6
0.0
0.2
0.2
0.1
0.2
0.3
0.7
0.7
0.6
0.7
0.7
0.6
2.9
3.3
3.2
1.3
5.1
7.2

1.1
1.5
1.4
1.3
5.1
6.1
35.9
39.0
44.5
50.7
52.7
32.8
35.3
40.2
42.2
43.5
1.3
1.3
1.7
1.3
1.2
37.2
40.3
46.2
52.0
53.9
33.8
36.5
40.7
42.2
43.5
10.8
13.3
8.7
9.5
11.2
(InpercentofGDP)
28.2
27.3
27.0
31.3
30.4
25.8
24.7
24.5
26.0
24.4
25.6
24.7
24.0
25.6
24.1
0.1
0.0
0.4
0.4
0.3
1.2
1.0
0.8
3.2
4.1
1.1
0.9
1.0
0.8
0.7
29.2
28.2
28.1
32.0
31.1
8.5
9.3
5.3
5.9
6.4

7,623
8,673
10,243 12,739 14,668
59.9
60.6
62.5
78.5
84.5
60.2
60.6
67.3
81.0
84.4
127.4
143.0
164.5
162.3
173.6
Source:SBP,EADandDPCOstaffcalculations

Positive developments in the trade balance, stable and robust workers remittances, and the relative
strengthoftheU.Sdollaragainstotherinternationalcurrencieshaveassistedinlimitingthegrowthof
EDL.However,lackofforeigncurrencyfinancingflowshasalsoplayedapartintheconstrainedgrowth
ofEDL,withtheburdenofdeficitfinancingshiftingtodomesticsources.
FollowingisabreakupofthedevelopmentsinthevariouscategoriesofEDL:
119

EconomicSurvey200910

8.31(i)PublicandPublicallyGuaranteedExternalDebt
PublicandPublicallyguaranteed(PPG)debtconsistsof Table8.10:CompositionofEDL*,FY10
all loans and bonds contracted by the government, or Component
Percent
inwhichthegovernmentisaguarantor.Theseinclude; Public&PublicallyGuaranteed
78.5%
medium and longterm obligations from multilateral
ParisClub
26.0%
and bilateral creditors, Pakistani Sovereign bonds,
Multilateral
43.0%
military, and commercial debt; and shortterm debt
OtherBilateral
4.6%
which is contracted mostly through the Islamic
ShortTerm
1.1%
DevelopmentBank.Theoutstandingstockofmedium
Other
3.8%
andlongtermdebtremainedfairlystagnantduringthe PrivateNonGuaranteed
5.9%
first three quarters of FY10, registering a net increase IMF
13.4%
ofUS$200milliontostandatUS$41.8billionbyend ForeignExchangeLiabilities
2.3%
March FY10. Multilateral debt, which is the single Memo:
largest component of Pakistans EDL, did not witness TotalEDL(InbillionsofUS$)
53.9
anysignificantchangesduringtheperiodunderreview. * EDL:ExternalDebt&Liabilities
The projectbased nature of loans contracted under
Source:DPCOstaffcalculations
this category hinges on Pakistans ability to instill
projectefficiency.Also,limitedaccesstoincreasedavenuesofmultilateralfinancinghasmeantthatthe
increaseinmultilateraldebthasbeenlimitedtoUS$100million.
The second largest portion of PPG debt is contracted from bilateral sources which include Paris Club
donors as well as other countries outside the Paris Club. While no net change was witnessed in the
outstanding stock of Paris Club debt, net inflows from otherbilateral sources amounted to US$ 500
million by endMarch FY10 mostly on account of US$ 200 million budget support made available
throughtheSaudiFundforDevelopment.
Other major developments in the outstanding stock of PPG debt include the repayment of US$ 600
millionInternationalSukukBondinJanuary2010.TheoveralllackofincreaseinthestockofPPGdebt,
although encouraging, signals limited access to foreign currency debt creating flows from multilateral
andbilateralsources.ThedearthofsuchfinancingflowshasmeantthattheGovernmenthashadtorely
ondisbursementsundertheIMFSBAandissuanceofdomesticdebttomeetitsfinancingrequirements.
Going forward, with repayments to the IMF beginning in FY12, access to concessional financing from
multilateralandbilateralsourcesmustbesecured.Increasedefficiencywithregardstoprojectdelivery
willassistinaugmentingthesefundingsources.
8.31(ii)IMFDebt
Similar to FY09, foreign currency debt flows during the year have been dominated by disbursements
undertheIMFSBA.ThethirddisbursementofSDR766.7million(US$1.2Billion)wasmadeonAugust7,
2009 followed by a fourth disbursement of the same amount on December 23, 2009. The recently
disbursed tranches contain an element of budgetary support as opposed to the strictly BoP support
natureofprevioustranches.TheoutstandingstockofIMFdebtnowstandsatUS$7.2billionasopposed
to US$ 5.1 billion at the end of FY09, growing by approximately 40 percent. Out of this outstanding
amount,US$1,083millionisforthepurposeofbudgetarysupport,whiletheremainderisbeingusedto
strengthen the countrys Balance of Payments. The latest tranche of approximately US$ 1.13 billion
dollarswasreceivedonMay19,2010.

120

PublicDebt

8.31(iii)PrivateNonGuaranteedDebtandForeignExchangeLiabilities
Private nonguaranteed debt by endMarch FY10 stood at US$ 3.16 billion, decreasing by US$ 200
millionor5.5percentinthefirstthreequarters.Outofthisamount,US$137millionisforprivatenon
guaranteed bonds while the remainder consists of loans. It is worth noting that substantial private
sectordebtplaysakeyroleinthefearsofadebtcrisisloomingoverdevelopedcountries,speciallythe
Euro zone. The exposure of Pakistans private sector to external debt is limited, thus reducing the
vulnerabilityoftheoveralldebtstock.ForeignExchangeLiabilities,whichmostlyconsistofCentralBank
Deposits,remainedfairlystable,withtheoutstandingstockdecreasingbyamarginalamountofUS$100
million.
8.32CommitmentsandDisbursementsofExternalDebt
Therehasbeenasignificantchangeinthepatternofcommitmentsforprojectandnonprojectaid.The
share of project aid was 35.9 percent during 200809, which increased to 67 percent by endMarch
2010.Unlikepreviousyears,theshareofprojectaidintotalcommitmentshasincreasedduringcurrent
financialyear.
Commitments of foreign economic assistance were $6,388 million during 200809, while total
commitments amounted to $4,730 million during the first nine months of the current fiscal year i.e.,
JulyMarch,200910. About66 percentoftotalcommitments duringJulyMarch200910werein the
shape of project aid while the remaining comprised nonproject aid. The share of BOP/Budgetary
supportintotalnonprojectaidwas17.8percent,TokyoPledges7.1percentandIDB(ST)6.9percent.
Disbursement of foreign economic assistance during 200809 was $4,688 million and $2,135 million
during JulyMarch, 200910. During JulyMarch 200910, disbursements of $2134.8 million were for
different purposes like Programmeloans/Budgetary Support ($561.3 million), Project Aid ($700.1
million), short Term Credits i.e. Trade Financing ($321.7 million), Earthquake Reconstruction &
Rehabilitation ($140.0 million), Tokyo Pledges ($358.0 million), IDPs ($51.5 million), and Afghan
Refugees Relief Assistance ($2.3 million). A summarized table of commitments and disbursements of
foreigneconomicassistanceisgiveninTable8.11.

Table8.11:CommitmentsandDisbursements,FY10*
Particulars
Commitments
200809
200910
(JulyMarch) (P)
Amount
%Share
Amount %Share
I.ProjectAid
2,296
35.9
3,175
67.1
II.NonprojectAid
4,092
64.1
1,555
32.9
a)NonFood
125
2
0
0
b)FoodAid
18
0.3
0
0
c)Budgetary
3,350
52.4
1,229
26
Support/(BOP)
d)IDB(ST)
597
9.3
324
6.8
e)AfghanR.R.A.
2
0
2.2
0
Total(I+II)
6,388
100
4,730
100
*AsofendMarch2010

(US$millions)
Disbursements
200809
200910
(JulyMarch) (P)
Amount %Share Amount %Share
1,272
27.1
840.1
39.3
3,415
72.8
1,295
60.7
175
3.7
0
0
0
0
0
0
2,582
55.1
971
45.5
656
2
4,688

14
322
15.1
0
2.2
0.1
100
2135
100
Source:EconomicAffairsDivision

121

EconomicSurvey200910

8.33TranslationalImpactduring200910
Whilethestockconsistsofvariouscurrencies,forall
intents and purposes the Pakistans External Debt
exposure is 100 percent dollarized, i.e. all loan
proceedsareconvertedintoPakRupeesatthetime
ofdisbursementandnoexchangecoverisarranged.
This effectively means that the external debt
portfolioisvulnerabletothemovementofUSDollar
exchange rate visvis other currencies and rupee
exchangeratevisvisUSD.AsPakRupeeisnotan
internationallytradedcurrency,theothercurrencies
are bought and sold via selling and buying of USD.
Historically, Pakistan has suffered significant losses
(increaseindebtstockduetocurrencymovements

Table8.12:HistoricalTranslationalImpact
Year
Translational
(Loss)/Gain*
1993
8
1994
(881)
1995
(1,729)
1996
2,485
1997
911
1998
1,683
1999
(685)
2000
(467)
2001
2,463
2002
(1,833)
2003
(1,437)
2004
(1,541)
2005
253
2006
(197)
2007
(67)
2008
(3,121)
2009
(53)
2010**
242
AverageLossPerYear
(220.3)
*:Estimated,**:Asof endMarch2010
Note: Due to unavailability of detailed data the
currency composition is assumed to be constant for
yearsbefore2007.
Source:DPCOstaffcalculations

as opposed to increased inflows). Since 1993,

Pakistanhassufferedanaveragetranslationallossof
approximately US$ 248 million per year. However,
the magnitude of these losses has been more
significant since 200001, with a peak of US$ 3.1
billionintranslationallossessufferedin200708.Itis
important to note that even in years where
translational losses have been limited, Pakistan has
not been able to capitalize on favourable
movements in international currency markets.
Furthermore, these figures only measure the losses
causedbymovementsinUSDollarvs.Thirdcurrency
andnotlossescausedbyappreciationofthedollaragainstthePakRupee.

TherelativestrengthofthedollaragainsttheEuro,Yen,andPoundSterlinghashadapositiveimpacton
Pakistans EDL. During the first nine months of FY10, Pakistan witnessed a translational gain of
approximately US$ 242 million. Sharp appreciation of the dollar against these major international
currencies caused a reduction in the USD equivalent of Pakistans foreign currency public debt of
approximately US$ 924 million in the third quarter of FY10 alone. Going forward, continuing fears of
highlevelsofdebtintheEurozonearelikelytomaintaintherelativestrengthofthedollar.However,
the historic losses due to international exchange rate movements underline the need for a
comprehensive currency hedging framework to be put in place. In this regard, the Debt Management
CommitteehasundertakentheformulationofastrategytohedgethemarketriskinherentinPakistans
externaldebtportfolio.
8.34ExternalDebtServicing
Servicing of external debt and liabilities during the first nine months of FY10 amounted to US$ 4.3
billion. Out of this amount, US$ 3.6 billion was for principal repayments during the period, while the
interest cost on external debt and liabilities reached US$ 771 million. When compared to a stock of
approximatelyUS$55.2billionattheendofFY09,therelativelysmalleramountofinterestpayments
122

PublicDebt

made during the first three quarters of FY10 signal Table8.13:Pakistan'sExternalDebtServicing($millions)

towards the concessional nature of most of the
Years
Actual
Amount
Total
AmountPaid
RolledOver
foreignloanscontractedbyPakistan.Thebulkofthe
FY05
2,783
1,300
4,083
servicing,approximately63percent,wasonbehalfof
FY06
2,896
1,300
4,196
public and publically guaranteed debt, with foreign
FY07
2,870
1,300
4,170
exchangeliabilitiesandprivatenonguaranteeddebt
FY08
3,122
1,200
4,322
making up a small portion of the total servicing
FY09
4,728
1,600
6,328
amount.Principalrepaymentsofpublicandpublically
FY10*
4,346
1,023
5,369
Source:SBP
guaranteed external debt also include the US$ 600 *AsofendMarch2010
millionrepaymentoftheInternationalSukukBondinJanuary2010.
8.35ExternalDebtBurdenandSustainabilityIndicators
Toattainaholisticpictureoftheburdenplacedbyexternaldebtontheeconomy,historicalchangesin
the burden, and to ascertain future direction and threats to the sustainability of the debt stock, an
analysisofratioslinkinglevelsofdebtanddebtservicingtomacroeconomicfundamentals,specifically
of the external account of the economy is mandatory. Managing the levels of external debt, and the
risksassociatedwiththemposepolicymakerswithadifferentsetofchallenges.WhileEDLexpressedas
a percentage of GDP might be a common means of measuring the indebtedness of an economy,
repaymentcapacityismoreaccuratelycapturedthroughexpressingthelevelsofdebtasapercentage
oftheeconomysforeignexchangeearningsandreserves.Additionally,analysisofthecurrentaccount
deficit provides important clues as to the future direction of the external debt path. A nil current
accountdeficitbeforeinterestpaymentandhighergrowthinForeignExchangeEarnings(FEE)compared
totheinterestratepaidonEDLwillensureadeclineinEDLburdenovertime.
Table8.14:ExternalDebtSustainabilityIndicators,FY05FY10*

FY05
FY06
FY07
FY08
FY09
FY10*
EDL/GDP
32.30%
29.20%
28.20%
28.10%
32.00%
31.10%
EDL/FER
2.8
2.8
2.7
4.0
4.1
3.6
EDL/FEE
1.3
1.2
1.2
1.3
1.5
1.5
EDLService/FEE
15.3%
13.5%
12.8%
11.7%
17.3%
11.8%
NonInterestCurrentAccountDeficit
2.9%
0.5%
2.9%
3.8%
7.1%
4.4%
STD/EDL
0.8%
0.5%
0.1%
1.5%
1.3%
1.1%
GrowthinEDL
1.8%
5.1%
8.3%
14.6%
14.3%
2.3%
GrowthinFEE
21.1%
16.3%
5.3%
13.0%
4.2%
3.2%
*:DebtStockasofendMarch2010,FEEendofyearprojection
FEE=ForeignExchangeEarnings,STD=ShortTermDebt,FER=ForeignExchangeReserves
Source:DPCOStaffCalculations

InspiteofamarginalincreaseinthestockofEDLinthefirstthreequartersofFY10,EDLasapercentage
ofGDPhasdeclinedto31.1percent;areductionof100bpsinninemonths.However,asthefigureof
EDLisforendMarch2010,andtheGDPisprojectedforthewholeyear,aslightincreaseinthisindicator
isexpectedinQ4FY10.Historically,Pakistanhashadverylimitedrelianceonshorttermexternaldebt,
therebyreducingtherefinancingrisktothecountrysdebtstock.ByendMarchFY10,STDdeclinedto
1.1percentoftotalEDLasopposedto1.3percentinFY09.
An overall improvement in the external account, coupled with limited foreign currency debt creating
flows,hasledtoadeclineinthegeneralexternalindebtednessofthecountry.Amarginaldecreasein
EDL/FERreflectstherecentconsolidationofforeignexchangereserves,andageneralimprovementof
123

EconomicSurvey200910

the countrys repayment capacity. Growth in exports and robust workers remittances has led to a
reductioninEDLandEDLserviceaspercentagesofFEE.Ifsuchperformanceissustainedwithregardsto
exportsand currenttransfers,therepayment burdenontheeconomywillbesignificantlylessened.A
reduction in the noninterest current account deficit also eases pressures on the debt portfolio going
forward.However,thepresenceofachronicnoninterestcurrentaccountdeficitneedstobeaddressed
to ensure sustainability of the external debt stock, particularly in light of a rebound in international
commodityprices.
Although Pakistans stock of outstanding External Debt consists mostly of longterm concessional rate
loansfrommultilateralandbilateraldonors,theadditionoftheIMFSBAwhichincludestrancheswitha
shorter repayment horizon and relatively higher interest rates has skewed the maturity profile of the
debtportfolio.Themajorityofrepaymentsaretobemadeintheperiod20112025.
8.36InternationalCapitalMarkets
Accesstointernationaldebtcapitalmarketshasbeenemployedbymanyemergingmarketeconomies
successfully. Although the cost is higher than the concessional financing provided by multilateral
institutions and the risk of adverse impact from currency movements remains, borrowing from global
capitalmarketsisseenasavitalstepinthedevelopmentoffinancialmarketsdomesticallyandinsetting
abenchmarkforsovereignpaper.
Table8.15:PerformanceofPakistansSovereignIssues(asofMay18,2010)
Issuer
Maturity
Amount
(US$million)
IslamicRepublicofPakistan
Mar31,2016
500
IslamicRepublicofPakistan
Jun1,2017
750

Coupon
(%)
7.125
6.875

Spreadover
UST(bps)
544
541
Source:JPMorgan

Pakistanhassuccessfullytappedtheinternationalmarketsinthepast.Thesovereignissuesof2016and
2017 are currently trading at 544 bps and 541 bps over UST (as of May 18, 2010) respectively. This
showsthattheyawningspreadshaverecoveredsharplyonlyrecentlyinresponsetoagradualrecovery
intheinternationalcapitalmarkets.
Fig8.5:Performanceof PakistanSovereignIssuesagainstEMBI+
140
120
100
80
60
40

Pakistan6.875%due2017Price
Pakistan7.125%due2016Price
EMBIPLUSESPPrice

20
0
2Jul07

124

2Jan08

2Jul08

2Jan09

2Jul09

2Jan10
Source: JPMorgan

PublicDebt

The fiscal year 200910 was characterized by the repayment of a maturing International Ijara Sukuk
BondworthUS$600milliondueon27January,2010withnonewissue.Pakistandoesnotconsiderthis
foray a viable option in the shortterm given the still high yields on the existing issues. However, it is
importanttokeeptheinvestorbaseintact.ThetrendintheperformanceofPakistansovereignissuesis
nearly in line with the Emerging Markets Bond Index Plus (See Figure8.5). The 2016 and 2017 issues
have fared well in the recent months owing to some stability on the domestic horizon due to
governmentsconsistenteffortstoputtheeconomybackontrack.Pakistanplanstocontinueaccessing
international markets, though opportunistically, so that the presence of Pakistani paper in these
marketsremainsvisible.

125

TABLE 8.1
INTERNAL DEBT OUTSTANDING (AT END OF PERIOD)
(Rs million)
Fiscal Year/
Type of Debt

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10*

%Change
2009-10/
2008-09

Permanent Debt

349,212

424,767

468,768

570,009

526,179

514,879

562,540

616,766

685,939

779,182

13.6

Floating Debt

737,776

557,807

516,268

542,943

778,163

940,233

1,107,655

1,637,370

1,903,487

2,299,737

20.8

Un-funded Debt

712,010

792,137

909,500

914,597

873,248

881,706

940,007

1,020,379

1,270,513

1,411,690

11.1

1,798,998

1,774,711

1,894,536

2,027,549

2,177,590

2,336,818

2,610,202

3,274,515

3,859,939

4,490,609

16.3

Permanent Debt

19.4

23.9

24.7

28.1

24.2

22.0

21.6

18.8

17.8

17.4

Floating Debt

41.0

31.4

27.3

26.8

35.7

40.2

42.4

50.0

49.3

51.2

Un-funded Debt

39.6

44.6

48.0

45.1

40.1

37.7

36.0

31.2

32.9

31.4

42.7

39.9

38.9

35.9

33.5

30.7

30.1

32.0

Total
Memorandum Items:

Total Debt as % of GDP (mp)

* : End-March 2010

(Percent Share in Total Debt)

30.3
30.6
Source: Budget Wing, Finance Division

TABLE 8.2
PUBLIC AND PUBLICLY GUARANTEED MEDIUM AND LONG TERM EXTERNAL DEBT DISBURSED
AND OUTSTANDING AS ON 31-03-2010
Country/Creditor
Public and Publicly Guaranteed Debt (I+II+III+IV)
i) MULTILATERAL
ADB
IBRD
IDA
Other
EIB
IDB
IFAD
NORD. DEV. FUND
NORD. I. BANK
OPEC FUND
ii) BILATERAL
a) Paris Club Countries
AUSTRIA
BELGIUM
CANADA
FINLAND
FRANCE
GERMANY
ITALY
JAPAN
KOREA
NETHERLANDS
NORWAY
RUSSIA
SPAIN
SWEDEN
SWITZERLAND
UNITED KINGDOM
UNITED STATES
b) Non Paris Club Countries
BAHRAIN
CHINA
KUWAIT
LIBYA
SAUDI ARABIA
UNITED ARAB EMIRATES
iii) BONDS
iv) COMMERCIAL BANKS

Debt Outstanding
as on 31-03-2010
41,640
23,221
11,068
1,707
9,831
616
63
319
187
15
7
23
16,572
14,017
67
34
531
6
2,178
1,824
105
6,674
476
117
21
121
80
153
106
10
1,514
2,555
1,882
105
5
442
121
1,572
275
Source: Economic Affairs Division

TABLE 8.3
COMMITMENTS AND DISBURSEMENTS OF LOANS AND GRANTS (BY TYPE)

Plan/
Fiscal Year
VI. 5th Plan
1978-79
1979-80
1980-81
1981-82
1982-83
Sub-Total
VII. 6th Plan
1983-84
1984-85
1985-86
1986-87
1987-88
Sub-Total
VIII. 7th Plan
1988-89
1989-90
1990-91
1991-92
1992-93
Sub-Total
IX. 8th Plan
1993-94
1994-95
1995-96
1996-97
1997-98
Sub-Total

Project Aid
CommitDisbursements
ments

Non-Project Aid
Non-Food
CommitDisbursements
ments

Food

BOP

Commitments

Disbursements

Commitments

Disbursements

Commitments

Relief
Disbursements

(US $ million)
Total
Commit- Disbursements
ments

1,064
1,002
591
887
1,115
4,659

599
808
676
536
744
3,363

190
121
182
320
174
987

213
161
103
174
299
950

55
55
73
110
120
413

50
21
66
89
80
306

86
419
16
10
531

86
419
16
10
531

61
111
293
178
643

61
111
293
178
643

1,395
1,658
973
1,620
1,587
7,233

948
1,470
972
1,102
1,301
5,793

1,580
1,804
1,810
2,035
1,903
9,132

695
903
1,055
1,006
1,223
4,882

166
161
186
331
390
1,234

149
125
93
205
219
791

88
196
163
130
230
807

177
79
245
57
218
776

155
150
135
130
164
734

155
150
135
130
164
734

1,989
2,311
2,294
2,626
2,687
11,907

1,176
1,257
1,528
1,398
1,824
7,183

1,979
2,623
1,935
2,219
1,204
9,960

1,262
1,312
1,408
1,766
1,895
7,643

663
201
346
43
182
1,435

537
386
451
316
232
1,922

392
258
134
322
454
1,560

542
287
136
284
309
1,558

146
217
50
413

146
217
50

413

132
140
111
105
57
545

132
140
111
105
57
545

3,312
3,439
2,576
2,689
1,897
13,913

2,619
2,342
2,156
2,471
2,493
12,081

1,822
2,714
2,219
1,351
776
8,882

1,961
2,079
2,151
1,821
1,552
9,564

3
57
1
1
62

15
23
21
1
1
61

329
279
395
405
578
1,986

251
258
383
409
622
1,923

411
750
1,161

303
211
625
1,139

19
29
10
2
1
61

19
29
10
2
1
61

2,581
3,025
2,681
1,759
2,106
12,152

2,549
2,600
2,565
2,233
2,801
12,748

1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09

1,382
527
407
970
547
1,210
2,026
3,258
1,365
2,440
2,296

1,620
1,263
1,030
741
846
622
918
2,084
1,308
1,565
1,272

0
0
0
0
0
0
0
133
0
125

0
0
0
0
0
0
0
0
80
175

185
567
81
40
0
0
0
22
0
0
18

270
100
23
114
9
0
0
10
12
0
0

650
284
1,128
2,590
1,236
1,263
1,202
1,225
2,649
1,310
3,947

550
385
1,128
1,880
1,057
755
1,803
1,262
2,058
2,013
3,238

2
2
21
0
11
2
0
1
3
2
2

2
2
5
21
8
3
2
1
3
2
2

2,219
1,380
1,637
3,600
1,794
2,475
3,228
4,506
4,151
3,752
6,388

2,442
1,750
2,186
2,756
1,920
1,380
2,723
3,357
3,381
3,660
4,688

2009-10
(Jul-Mar)

3,175

840

1,553

1,293

4,730

2,135

Project Aid Includes Commitments and Disburesements for Earthquake Rehabilitation & Construction
BOP includes Commitment and Dibursement for IDB Short term and Tokyo Pledeges
Exclusive of IMF Loans
@ : IMF Loan.

@
@

284
469
332
47
350
115
0
425
353
597

Source: Economic Affairs Division

TABLE 8.4
ANNUAL COMMITMENTS, DISBURSEMENTS, SERVICE PAYMENTS AND
EXTERNAL DEBT OUTSTANDING (Medium and Long Term)

Fiscal
Year
1960-61
1961-62
1962-63
1963-64
1964-65
1965-66
1966-67
1967-68
1968-69
1969-70
1970-71
1971-72
1972-73
1973-74
1974-75
1975-76
1976-77
1977-78
1978-79
1979-80
1980-81
1981-82
1982-83
1983-84
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09

Debt outstanding
(end of period)
DisUndisbursed
bursed*
171
..
225
..
408
..
661
..
1,021
..
1,325
..
1,696
..
2,099
..
2,532
..
2,959
..
3,425
..
3,766
..
4,022
..
4,427
..
4,796
1,854
5,755
1,811
6,341
1,914
7,189
2,041
7,792
2,514
8,658
2,586
8,765
2,579
8,799
2,921
9,312
3,087
9,469
3,436
9,732
4,321
11,108
5,242
12,023
6,113
12,913
7,070
14,190
7,372
14,730
8,279
15,471
9,232
17,361
9,461
19,044
9,178
20,322
9,014
22,117
9,806
22,292
7,761
22,509
8,583
22,844
6,164
25,423
5,076
25,359
3,421
25,608
2,860
27,215
3,504
28,301
3,811
28,900
5,392
30,813
4,975
32,407
5,838
35,182
6,277
39,530
6,540
41,612
7,451

Transactions during period

Commitments
479
429
645
526
832
537
628
561
656
555
873
143
543
1,268
1,115
951
1,111
963
1,395
1,658
973
1,620
1,587
1,989
2,311
2,294
2,626
2,687
3,312
3,439
2,576
2,689
1,897
2,581
3,025
2,681
1,759
2,106
2,219
1,096
1,168
3,268
1,747
2,125
3,113
4,506
3,726
3,399
5,791

@
@

Disbursements**
342
304
501
541
706
533
623
729
594
564
612
409
355
498
976
1,051
960
856
948
1,470
972
1,102
1,301
1,176
1,257
1,528
1,399
1,824
2,619
2,342
2,156
2,471
2,493
2,549
2,600
2,565
2,233
2,801
2,442
1,490
1,846
2,423
1,729
1,372
2,452
3,163
3,356
3,160
4,032

2009-10
41,839
8,959
4,406
1,813
(Jul-Mar)
.. : not available
@ : Inclusive of IMF(SAF) Loan
** : Excluding short term credits, commercial credits, bonds and the IMF

@
@

Service Payments**
Principal
Interest
Total
11
6
17
20
11
31
34
13
47
44
18
62
37
25
62
41
33
74
52
44
96
62
46
108
93
65
158
105
71
176
101
81
182
71
51
122
107
86
193
118
79
197
144
104
248
141
108
249
175
136
311
165
162
327
234
203
437
350
234
584
360
243
603
288
203
491
390
244
634
453
274
727
513
275
788
603
303
906
723
378
1,101
691
426
1,117
685
440
1,125
741
491
1,232
782
534
1,316
921
592
1,513
999
649
1,648
1,105
673
1,778
1,323
752
2,075
1,346
791
2,137
1,510
741
2,251
1,600
723
2,323
955
399
1,354
893
508
1,400
974
583
1,557
745
462
1,207
793
546
1,339
2,336
659
2,995
871
600
1,470
1,581
982
599
968
644
1,612
1,062
704
1,766
2,195
693
2,888
2,007

* : Excluding grants

550

2,558

$ Million
Debt Servicing as % of
Foreign
Export
Exchange
Receipts
Earnings
GDP
14.9
..
0.4
27.2
..
0.7
22.4
..
1.0
27.4
..
1.2
25.9
..
1.1
29.2
..
1.1
35.2
..
1.3
31.2
..
1.3
44.3
..
1.8
52.1
..
1.8
43.3
..
1.7
20.6
..
1.3
23.6
18.1
3.0
19.2
14.2
2.2
..
16.3
2.2
21.9
13.7
1.9
27.3
15.3
2.1
24.9
11.2
1.8
25.6
12.0
2.2
24.7
11.9
2.5
20.4
10.6
2.1
19.9
8.8
1.6
23.5
9.6
2.2
26.3
10.9
2.3
31.6
12.9
2.5
29.5
13.5
2.8
29.9
15.6
3.3
25.1
14.7
2.9
24.1
14.4
2.8
24.9
14.4
3.1
21.5
13.7
2.9
21.9
13.2
3.1
24.2
15.3
3.2
25.7
16.2
3.4
25.1
16.5
3.4
24.5
16.7
3.4
27.2
17.6
3.6
27.3
17.6
3.8
19.7
13.6
2.6
17.6
11.9
2.1
21.3
13.7
2.8
13.2
7.8
1.7
12.2
6.5
1.6
24.0
13.6
3.1
10.2
5.5
1.3
9.6
5.1
1.2
9.3
4.9
1.1
8.6
4.8
1.1
15.1
1.8
8.2
13.3

7.0

1.5

Source: Economic Affairs Division

TABLE 8.5
DEBT SERVICE PAYMENTS OF FOREIGN MEDIUM AND LONG TERM LOANS (Paid in foreign exchange)
(US $ million)
Fiscal Year

Kind

I. PARIS CLUB COUNTRIES

Principal
Interest
Principal
2 Austria
Interest
Principal
3 Belgium
Interest
Principal
4 Canada
Interest
Principal
5 Denmark
Interest
Principal
6 France
Interest
Principal
7 Finland
Interest
Principal
8 Germany
Interest
Principal
9 Italy
Interest
Principal
10 Japan
Interest
Principal
11 Korea
Interest
Principal
12 Norway
Interest
Principal
13 Netherlands
Interest
Principal
14 Russia
Interest
Principal
15 Sweden
Interest
Principal
16 Spain
Interest
Principal
17 Switzerland
Interest
Principal
18 USA
Interest
Principal
19 UK
Interest
Principal
TOTAL (I)
Interest
II. NON-PARIS CLUB COUNTRIES
Principal
1 China
Interest
Principal
2 Czecho - slovakia
Interest
Principal
3 Kuwait
Interest
Principal
4 Libya
Interest
Principal
5 Saudi Arabia
Interest
Principal
6 UAE
Interest
Principal
TOTAL (II)
Interest
1 Australia

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

105.534
4.680
0.030
0.703
0.000
1.654
8.097
1.073
0.000
0.000
0.203
15.315
0.000
0.307
5.741
7.493
2.262
1.778
38.689
73.006
0.123
13.040
2.938
2.577
1.016
0.952
0.000
3.098
1.737
3.407
0.000
1.185
0.000
1.541
43.244
59.906
6.470
8.954
216.084
200.669

0.000
0.000
0.000
0.353
0.000
0.864
0.000
0.740
0.000
0.000
0.034
16.508
0.000
0.157
0.854
7.403
1.115
0.982
46.279
28.445
0.000
5.232
0.000
0.543
0.710
0.637
0.000
3.457
0.000
4.693
0.000
0.860
0.000
0.867
7.839
33.115
3.845
2.153
60.676
107.009

0.000
0.000
0.000
2.072
0.000
3.102
0.000
1.317
0.000
0.000
0.000
47.516
0.000
0.111
3.834
18.903
2.136
2.718
70.319
36.224
0.000
0.000
2.125
1.797
1.102
1.337
0.000
0.000
0.000
1.987
0.000
1.681
0.000
0.941
11.402
61.619
5.643
2.552
96.561
183.877

0.000
0.000
0.695
3.207
0.000
1.413
0.000
1.438
0.000
0.000
28.766
61.557
0.000
0.088
7.925
17.575
0.316
2.753
396.646
129.721
44.834
24.884
2.124
1.537
0.000
2.419
0.000
0.000
0.000
1.962
0.098
1.753
0.000
0.803
1.721
56.098
36.203
6.537
519.328
313.745

0.000
0.000
0.376
4.212
0.000
1.767
0.302
2.766
0.000
0.000
10.636
82.615
0.024
0.164
2.64
20.981
0.541
3.605
48.114
149.982
45.272
23.787
3.877
1.321
0.221
1.894
0.937
3.367
0.412
3.553
0.580
2.372
0.253
1.319
10.492
64.334
0.959
0.545
125.636
368.584

0.000
0.000
1.223
3.637
0.000
1.859
0.841
4.436
0.000
0.000
24.921
81.489
0.055
0.286
12.749
29.826
0.642
2.331
65.577
86.805
96.485
38.168
4.064
2.196
0.528
3.050
18.958
23.375
0.957
7.063
1.369
2.911
0.555
1.530
19.645
61.191
1.916
0.598
250.485
350.751

0.000
0.000
1.145
3.634
4.623
2.003
1.289
5.584
0.000
0.000
31.366
87.430
0.084
0.364
15.294
32.225
21.415
1.168
49.280
91.573
55.725
40.759
12.124
0.598
0.679
3.223
2.751
6.566
1.862
9.262
1.051
3.222
0.943
2.244
28.396
63.618
1.076
0.655
229.103
354.128

0.000
0.000
2.680
4.483
10.326
2.266
1.662
5.359
0.000
0.000
35.983
99.483
0.108
0.360
16.202
36.354
24.039
1.294
46.528
103.564
56.254
22.623
12.124
0.460
0.654
3.656
2.859
6.436
2.768
9.042
0.857
3.149
1.467
3.363
20.261
62.136
0.110
0.382
234.882
364.410

0.000
0.000
1.698
2.153
0.281
0.952
0.833
4.257
0.000
0.000
14.355
42.720
0.041
0.104
6.846
15.070
0.205
0.465
42.547
137.479
29.886
9.770
1.251
0.580
0.275
3.130
1.364
3.165
1.434
2.711
0.392
1.249
0.725
1.631
9.500
27.542
0.072
0.256
111.705
253.234

163.019
29.702
3.767
0.000
1.478
0.000
0.000
0.000
0.000
0.466
0.000
0.000
168.264
30.168

90.810
20.699
0.000
0.000
1.226
0.000
0.000
0.000
0.000
0.057
0.000
0.336
92.036
21.092

35.228
25.661
0.000
0.000
3.030
0.900
0.000
0.000
13.079
2.900
1.000
0.824
52.337
30.285

14.798
13.980
0.000
0.000
5.395
2.195
0.000
0.000
5.424
1.285
1.000
0.824
26.617
18.284

13.868
13.310
0.000
0.000
5.733
2.032
0.000
0.000
5.373
1.122
0.000
0.678
24.974
17.142

18.967
7.377
0.000
0.000
7.054
2.203
0.000
0.000
3.383
1.162
0.000
1.015
29.404
11.757

14.148
11.623
0.000
0.000
7.079
2.369
14.229
1.789
0.000
1.168
0.000
1.784
35.456
18.733

14.148
10.060
0.000
0.000
7.408
2.438
1.823
0.060
0.000
1.171
0.000
2.122
23.379
15.851

13.074
8.473
0.000
0.000
5.355
1.800
0.100
0.029
0.833
0.584
0.000
2.123
19.362
13.009

2009-10
(Jul-Mar)

2.144
2.183
0.373
1.086
0.874
0.816
14.001
48.273
0.057
0.053
5.183
10.123
0.223
0.213
41.678
68.876
4.665
5.055
1.252
0.534
0.159
3.112
1.193
3.102
1.507
1.376
0.257
1.03
0.859
0.767
6.422
22.412
0.059
0.061
80.906
169.072
13.074
39.53

6.205
2.343
0.1
0.07
58.278
4.015
2.122
77.657
48.080
(Contd.)

TABLE 8.5
DEBT SERVICE PAYMENTS OF FOREIGN MEDIUM AND LONG TERM LOANS (Paid in foreign exchange)
(US $ million)
Fiscal Year

Kind

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

245.272
75.061
322.704
77.419
112.724
51.049
7.962
2.043
2.956
0.612
8.3
0.243
699.918
206.427

236.757
74.020
294.377
99.280
118.566
50.918
7.468
1.802
3.504
0.795
270.712
11.039
931.384
237.854

261.303
89.089
273.293
110.839
127.293
59.761
8.362
1.827
4.066
1.690
271.712
12.039
946.029
275.245

330.746 290.259
119.058
97.158
296.781 243.627
111.589
64.652
143.618 126.149
73.878
64.170
8.413
7.188
1.951
1.433
6.942
4.544
3.726
4.126
25.000 791.501
22.866
28.026
811.500 1463.268
333.068 259.565

2009-10
(Jul-Mar)

III. MULTILATERAL
Principal
Interest
Principal
2 IBRD
Interest
Principal
3 IDA
Interest
Principal
4 IFAD
Interest
Principal
5 IDB
Interest
Principal
6 IDB (ST)
Interest
Principal
TOTAL (III)
Interest
IV. DEVELOPMENT FUNDS
Principal
1 NORDIC
Interest
Principal
2 OPEC Fund
Interest
Principal
3 Turkey (EXIM Bank)
Interest
Principal
4 E.I. Bank
Interest
Standard charted Principal
4
Bank
Interest
Principal
TOTAL (IV)
Interest
V. GLOBAL BONDS
Principal
1 Euro Bonds
Interest
Principal
2 Saindak Bonds
Interest
Principal
3 US Dollar Bonds (NHA
Interest
Principal
TOTAL (V)
Interest
Principal
TOTAL (I+II+III+IV+V)
Interest
Total
VI. OTHERS
Principal
1 NBP's
Interest
Principal
2 Bank of Indosuez
Interest
Principal
3 NBP Bahrain
Interest
Principal
4 ANZ Bank
Interest
Principal
5
Cash (ST)
Interest
Principal
IMF
6
Interest
Principal
TOTAL (VI)
Interest
Principal
Total (I+II+III+IV+V+VI)
Interest
Grand Total (P+I)
1 ADB

247.044
151.188
227.914
153.780
66.534
27.935
7.685
2.206
23.246
3.955

241.442
151.668
233.789
132.161
72.592
30.054
7.354
1.996
23.083
2.061

265.981 1370.429
172.738 179.919
249.499 287.173
110.541
94.797
83.452
97.926
39.885
45.063
7.504
7.712
1.751
2.106
9.679
3.208
1.046
0.731

572.423
339.064

578.260
317.940

616.115 1766.448
325.961 322.616

1.918
2.087
8.003
0.749
0.000
5.981
0.000
0.254

2.023
1.065
6.597
0.754
0.000
2.514
0.000
0.234

2.232
0.723
6.504
0.707
9.959
0.388
0.000
0.939

2.375
0.565
5.178
0.595
0.000
0.000
0.637
1.722

2.519
0.685
4.800
0.546
12.900
1.875
0.679
2.592

2.442
0.917
4.561
0.591
25.800
2.776
1.345
3.324

2.482
1.007
4.204
0.571
12.900
0.648
2.094
4.262

2.562
0.875
4.935
0.495
0.000
0.000
2.600
3.847

1.281
0.281
2.849
0.387
0.000
0.000
1.583
1.626

9.921
9.071

8.620
4.567

18.695
2.757

8.190
2.882

20.898
5.698

34.148
7.608

21.680
6.488

10.097
5.217

5.713
2.294

0.200
0.000 155.458 155.459 155.458 155.459
0.000
0.000 500.000
62.685
62.340
62.023
39.181
57.644
91.561 145.000 207.667 151.439
7.716
4.526
0
0
0
0
4.527
4.527
0.000
1.533
6.544
0
0
0
0
0.282
0.282
0.000
21.903
21.903
21.903
21.903
21.903
0
21.903
21.903
21.963
16.573
7.118
4.594
3.326
4.414
0
5.684
5.684
3.680
29.819
26.429 177.361 177.362 177.361 155.459
26.43
26.43 521.963
80.791
76.002
66.617
42.507
62.058
91.561 150.966 213.633 155.119
996.511 766.021 961.069 2497.945 1048.787 1400.880 1258.698 1106.288 2122.011
659.763 526.610 609.497 700.034 659.909 699.531 805.560 932.179 683.221
1656.274 1292.631 1570.566 3197.979 1708.696 2100.411 2064.258 2038.467
0.000
0.000
5.130
2.262
0.000
0.000
2.500
1.392

0.000
0.000
3.195
0.975
0.000
8.500
2.500
1.535

0.000
0.870
9.585
1.012
0.000
1.410
0.000
0.000

0.000
0.866
6.245
0.213
9.286
0.621
0.000
0.000

3.111
0.981
0.000
0.000
4.286
0.983
0.000
0.000
16.280
7.416

2.945
1.118
0.000
0.000
0.000
0.469
4.286
0.552
16.280
10.370

2.979
1.077
0.000
0.000
0.000
0.000
4.286
0.856
17.280
11.370

3.016
0.804
0.000
0.000
4.286
0.474
0.000
6.657
16.280
9.105

2.988
0.335
0.000
0.000
3.571
0.111
0.021
4.048
66.28
5.766

7.6
5.7
9.6
15.5
23.7
23.5
24.5
23.6
72.9
3.7
11.0
3.3
1.7
9.4
12.5
13.3
17.0
10.3
1004.141 771.716 970.654 2513.476 1072.464 1424.391 1283.243 1129.870 2194.871
663.417 537.620 612.789 701.734 669.289 712.040 818.863 949.219 693.481
1667.558 1309.336 1583.443 3215.210 1741.753 2136.431 2102.106 2079.089 2888.352

355.887
87.2
198.325
29.451
133.739
70.773
6.798
1.307
5.734
3.359
349.923
12.406
1050.406
204.496
0.749
0.119
2.848
0.502

4.204
0.983
50.000
3.170
57.801
4.774
600
106.259

21.903
1.485
621.903
107.744
1888.673
534.166

3.022
0.142

116.279
2.849
0
13.379
119.3
16.4
2007.974
550.536
2558.510

TABLE 8.6
TERMS OF FOREIGN LOANS/CREDITS CONTRACTED BY PAKISTAN
Lending Country/Agency
A. Paris Club Countries
1. Germany
2. Japan
3. France
4.Italy
Sub-Total (A):
B. Non-Paris Club
1. China
2. Kuwait
3. Saudi Arabia
4. Korea
5.UAE
Sub-Total (B):
C. Multilateral
1. I DB (ST)
2. IDB
3. IDA
5. ADB
6. OPEC
7. IBRD
8. IFAD
Sub-Total (C):
Total (A+B+C)

2006-07
Interest Rate/
Commission(%)

Amortization
(years)

5.8
197.8
50.2
253.8

0.75
1.3
LIBOR EURO 6 months -200bps
-

40
30
20
-

38.1
133.1
171.2

2.5
LIBOR 12 months +20 Bps
2.5

24
2
25

425
200.0
912.1
1443.3
10.0
100
3090.4
3515.4

LIBOR 6 months '+ 60 bps

LIBOR 6-12 months+60-2.15 bps
0.75
1-1.5& LIBOR+60bps
1.25
LIBOR 6 months + 60 bps
-

2
1-18
35
15-32
20
20
-

2008-09
Interest Rate/
Commission(%)

Amortization
(years)

Amount
(US $ Million)

138.3
98.3
236.6

0.75
LIBOR EURO 6 months -200bps

40
20

125.2
800
205.2

3.25
0-5
1.0

3
10-15
30-40

Amount
(US $ Million)

Lending Country/Agency
Amount
(US $ Million)
A. Paris Club Countries
1. Germany
2. Japan
3.France
Sub-Total (A)
B. Non-Paris Club
1. Saudi Arabia
2. China
3. Korea
4. Kuwait
Sub-Total (B)
C Multilateral
1. IDA
2. ADB
3. OPEC
4. I DB
5. IDB Stort-term
6. IFAD
7.IBRD
8.EIB
Sub-Total (C)
Total (A+B+C)

2007-08
Interest Rate/
Commission(%)

Amortization
(years)

460.3

0.2-1.3

20-30

12.1
472.4

0.0

20.0

327.7
40.1

3%
2%

15
26

20.0

1%

30

352.8
224.2
259.2
1436.8
5.3

5.8
1.25-5.1
0.75+4.9%
1-1.5 &Libor+60bps
2.5

1
1-18
35
15-24
20

36.3
2314.6
3174.8

0.75

40

2009-10 ( July- March )

Interest Rate/
Commission(%)

Amortization
(years)

387.8

1130.4
1528.7
1759.7
66.3
287.8
596.5

0.75
Libor+0.6
Libor+1.85
Libor+0.55 and 3.825
Libor+2.5

35
24
20
1-18
1

173.4

0.75

30

4412.4
5779.4

Amount
(US $ Million)

249.4
103.6
353

1.2 fixed
1.6 fixed

30

280
1505.8

2 fixed and Libor 3 months +0.5

1-2 fixed and Libor 6 months +0.22

8-20
20-25

49.9
1835.70

1 fixed

25

508.4
151.7

0.75 fixed
1.5 and Libor 6 months + 0.6

35
23

140
324.4
18.8

US Swap rate 15 years +1.2

Libor Euro 6 months +2.15
-

20
1
26

149.5
1292.8
3481.5

Libor Euro 6 months + 0.15

35

Source: Economic Affairs Division

TABLE 8.7
GRANT ASSISTANCE AGREEMENTS SIGNED
1999-00
I. Paris Club Countries
1. Australia
2. Austria
3. Canada
4. Germany
5. Japan
6. Netherlands
7. Norway
8. Korea
9. Switzerland
10. UK
11. USA
12. Italy
Sub-Total (I)
II
1.
2.
3.
4.
5.

Non Paris Club Countries

China
Iran
UAE
Oman
Saudi Arabia
Sub-Total (II)

III Multilateral
1. ADB
2. EEC / EU
3. Islamic Development Bank
4. IDA
5. IBRD
6. UN and Specialised Agencies
7. UNDP Special Grant
8. World Food Programme
9. UNFPA
Sub-Total (III)
IV Relief Assistance for
A. Afghan Refugees
B. Earthquake
1. AFGHANISTAN
2. ALGERIA
3. AUSTRIA
4. AZERBAIJAN
5. BHUTAN
6. BRUNEI
7. CHINA
8 .CYPRUS
9. INDONESIA
10. JORDAN
11. MALAYSIA
12. MOROCCO
13. OMAN
14. PAK-TURK FOUNDATION
15. SAUDI ARABIA
16. SOUTH KOREA
17. THAILAND
18. TURKEY
19. UK
20. ADB
21. WB (IDA)
22. Germany
23. IDB
24. MAURITIUS
Sub-Total (IV)
Grand Total (I+II+III+IV)

(US $ million)
2000-01

2001-02

2002-03

2003-04

2004-05

0.3
5.1

2.3
3.5

1.9

2005-06

2006-07

0.1
0.7

50.7

46.0

21.0
113.5

3.9

10.4

3.2

31.4
67.8

2008-09

9.4

5.5

6.6

41.6

37.3

90.5
147.0
2.6
247.3

16.5
80.8
103.1

45.7
630.6
760.7

8.2
158.8
65.4
287.0

79.0
129.4
278.9

44.1
647.5
829.3

0.7
227.5
514.3
842.5

67.7
269.4
374.4

7.7
-

6.6
50.1

31.0
-

0.2
-

0.0
-

49.4
-

0.4

7.7

56.7

31.0

100.0
100.0

50.0
50.2

0.0

0.0

49.4

0.4

2.8

1.5
5.4
0.3

175.0
68.7

21.2
0.3
0.3
10.1
11.4

1.2

5.0
58.1

55.6

114.8

1.0

0.8
1.0

51.7
20.8

1.5
3.9
111.0

3.2
67.0

27.4
26.6
5.9
130.3

43.3

2.0

20.8

0.2

11.0

2.1

2.0
371.8

20.8
247.7

0.2
922.2

11.0
441.3

2.1
404.9

0.0
945.7

73.7

116.4

14.7
33.0
4.3
1.5

0.2

0.4
75.2
0.5
35.9

2009-10
(Jul-Mar)

0.9

13.8
3.7
65.1
15.7

2007-08

136.9
118.9

142.5
377.4

331.9
794.5

272.7

567.0

1179.9

0.0

25.2

66.5

9.1

0.1

0.5
1.9

2.5

1.4

177.4

74.7

1.5

30.7

66.5

1.5

3.4

1.6

2.2

2.2

0.5
1.0

1.5
0.1
0.6
36.8
0.1
1.0
1.0
1.0
1.5
5.0
4.0
200.0
0.5
0.5
150.0
-

0.3
0.0
406.9
1426.9

133.3
-

5.5

300.0

10.0

136.7
635.2

301.6
12.2
2.2
576.2
609.9
1248.6
Source : Economic Affairs Division

TABLE 8.8
TOTAL LOANS AND CREDITS CONTRACTED
(US $ million)
Lending Country/Agency
A. Paris Club Countries
1. Austria
2. Australia
3. Belgium
4. Canada
5. France
6. Germany
7. Japan
8. Netherlands
9. Norway
10. Spain
12. UK
13. USA
14. Italy
15. Sweden
Sub-Total (A)
B. Non-Paris Club Countries:
1. China
2. Korea
3. Kuwait
4. Saudi Arabia
5. Turkey (EXIM Bank)
6. Abu Dhabi Fund
Sub-Total (B)
C. Multilateral:
1. IBRD
2. IDA
3. ADB
4. IFAD
5. European Investment Bank
6. OPEC Fund
7. IDB
9. KPC
10. IDB (ST)
Sub-Total (C)
Grand-Total (A+B+C)

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

16.0
-

102.6

500.0
2.0
566

10.0
10.0

18.2

2007-08

2008-09

(Jul-Mar)
2009-10

26.0
-

50.0
6.0
198.2
-

12.1

60.5

26.0

0.0

102.6

245.0

254.2

472.5

236.0

353.0

44.4

287.0

118.2

355.0

322.2
17.0

328.0
20.0

800.0
205.0

1505.8

18.2

38.0
82.4

265.0
552.0

118.2

25.0
25.0

34.3
389.3

88.5
51.8

347.6
409.0
17.4

833.5
860.0
14.2

268.0
878.0

53.0
691.0
879.0
22.2
50.0

10.0
44.0

10.0
17.0

15.0

469.0
1,297.0
1,389.4

332.0
2,066.7
2,679.2

47.0
1,208.0
1,352.2

63.7
-

284.0
424.2
1,008.1

1.0
32.6
1.9
9.0
-

245.0

350.0
2,045.2
2,070.2

98.0
138.0
460.4

103.6
249.4

40.0

125.0

49.9
280.0

339.2

38.1
133.1
171.2

388.0

1130.0

1835.7

340.0
601.8
725.2

319.0
1166.4
835.0
54.0

100.0
912.0
1443.3
-

259.1
1436.4
36.4

8.0

121.0

10.0
200.0

5.1
224.0

115.0
1,790.0
2,281.9

2,495.4
3,079.6

425.0
3,090.3
3,515.7

173.4
1529.0
1760.0

66.0
288.0

508.4
151.7
18.8
149.5
140.0
324.4

353.0
597.0
2,314.0
4,413.4
1,292.8
3,174.5
5,779.4
3,481.5
Source : Economic Affairs Division