Chapter 9

Pub blic Debt D

duction 9.1 Introd Developin ng countries hinge in a delicate d balance; they need d to borrow in order to facilitate th heir developm ment process - on the other o hand the t borrowing g should be allocated a effi iciently in view of their re epayment abi ility. Debt ma ay well act as a catalyst in n the course of o growth of an a economy, but b only if it t is undertaken to facilita ate a very well w thought out o road map devised with h due diligen nce. Such mea asures can also a lead to strengthening g a countrys capacity of f repayment. Unsustainab ble levels of debt can plague econom mic growth by lowering the actual dev velopmental expenditure e d due to heavy debt servicing requiremen nt. This intricate scenario calls c for a co omprehensive e, dynamic and a rule based d policy whic ch ensures th he right choic ces among several opt tions, addre esses financ cial constraint ts and ensure es intergener rational welfa fare impact. s debt dy ynamics hav ve undergo one Pakistans substantia al changes since s fiscal year 2007. A myriad d of domestic issues and d the interna ational recession and cred dit crises ha ave impacted d the ys debt position. Higher interest paym ments, country large su ubsidies spec cially food an nd energy, gro owing security y spending ne eeds, narrow tax base and rising interna ational comm modity prices have result ted in large tw win account (i.e. ( fiscal an nd current acc count) deficits s. The financ cing of the fiscal deficit t is a growin ng challenge in i the wake of o the shrinkin ng net foreign n assets of th he banking system s in Pak kistan owing to the curren nt account de eficit; the resultant liquidit ty crunch is exerting pressure on dom mestic interest t rates. Low wer FDI and other non n-debt creating flows due to t energy shor rtages and security concern ns have contributed towards t neg gative balance e of paymen nt and draw wdown on of fficial foreign n currency reserves of th he country. Total Liquid Foreign Ex xchange Rese erves were $16.49 $ billion by end-Apr ril 2012, com mpared to $18.24 $ billion as of end Jun ne 2011.

Fig-9.1: Public Deb bt (as percent of o GDP)

100% 90% 80% 70% 60% 50% 40% 30% 20% FY80 FY90 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12-Q3

125

Pakistan Economic Survey 2011-12 9.2 Public Debt Total public debt is a measure of government indebtedness. It includes all government and government guaranteed obligations denominated in rupee as well as foreign currency. It is an important means of bridging government financing gaps. However, excessive reliance on public debt and inappropriate public debt management raise macroeconomic risks, impede economic growth, and hinder economic development. Domestic and external debt should be treated separately. Domestic debt is a charge on the budget and must be serviced through government revenues and/or additional borrowings whereas external debt (both public and private) in addition to government
Table-9.1 Public Debt 1990 Domestic Currency Debt Foreign Currency Debt Total Public Debt Rupee Debt Foreign Currency Debt Total Public Debt Rupee Debt Foreign Currency Debt Total Public Debt 374 428 801 42.8 48.9 91.7 235 269 505 1995 790 873 1,662 42.3 46.8 89.1 245 270 515 2000 1,576 1,442 3,018 41.2 37.7 78.9 308 281 589 2008 2009 2010 2011 2012* (In billion Rs.) 2,178 3,275 3,859 4,654 6,015 7,206 1,913 2,780 3,736 4,284 4,694 4,818 4,091 6,055 7,595 8,938 10,709 12,024 (In percent of GDP) 33.5 32.0 30.3 31.4 33.4 34.9 29.4 27.1 29.4 28.9 26.0 23.3 62.9 59.1 59.7 60.4 59.4 58.2 (In percent of Revenue) 242 218 208 224 266 251 213 185 202 206 208 168 455 404 410 430 474 419 (In percent of Total Debt) 53.2 54.1 50.8 52.1 56.2 59.9 46.8 45.9 49.2 47.9 43.8 40.1 2005

revenues is also a charge on the balance of payment and must be serviced from foreign exchange earnings, reserve drawdown, and additional borrowings. As at end of March 2012, public debt stood at Rs. 12,024 billion registering an increase of Rs. 1,315 billion or 12.3 percent as compared to fiscal year 2011. The increased amount includes Rs. 391 billion consolidated by the government into public debt against outstanding previous years subsidies related to the food and energy sectors. Public debt as a percent of GDP stood at 58.2 percent by endMarch 2012 compared to 55.5 percent of GDP during the same period last year.

Rupee Debt 46.6 47.5 52.2 Foreign Currency Debt 53.4 52.5 47.8 Memo: Foreign Currency Debt 19.5 28.1 27.5 32.1 40.7 45.9 50.1 54.6 53.1 ($ Billion) Exchange Rate 21.9 31.1 52.5 59.7 68.3 81.4 85.5 86.0 90.7 (Rs./U.S.$, E.O.P) GDP (in Rs. Billion) 874 1,866 3,826 6,500 10,243 12,724 14,804 18,033 20,654 Total Revenue (in Rs. Billion) 159 323 513 900 1,499 1,851 2,078 2,261 2,871 Source: State Bank of Pakistan, Budget Wing, Economic Advisers Wing & Debt Policy Coordination Office * End-March

Historically, public debt stock accounted for almost the same burden from domestic and external sources. However, government has increasingly focused on the domestic part over the last few years owing to non-availability of

sufficient external financing i.e. domestic borrowings inched up in share from 46.6 percent in fiscal year 1990 to 59.9 percent at end March, 2012.

126

Public c Debt

Fig-9.2 Sources of Public P Debt (p percent)

60 55 50 45 40 35 30 25 20 15 10 5 0 FY90 FY95 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 Q3-FY12 FY 11

Domes stic Currency Debt t

F Foreign Currency Debt D

lic debt ma ay be under rstated witho out The publ reporting contingent liabilities s. Continge ent liabilities are not adde ed to the ove erall debt of the t country. However, contingent liabilities are a possible obligations o th hat arises fro om past events and whose existence will w be confirm med only by the t occurrenc ce or non-oc ccurrence of f one or mo ore uncertain future even nts not who olly within the t f the governm ment. In the case of Pakistan, control of these incl lude, for ins stance, explic cit and impli icit guarantee es issued to Public Sec ctor Enterpris ses (PSEs) an nd unfunded losses of state e owned entiti ies. The Go overnment of o Pakistan issued new guarantee es aggregating g Rs. 146.6 billion or 0. .71 percent of o GDP. Total outstan nding stock of governme ent guarantees as of March h 2012 stood d at Rs. 487 bi illion.
Table-9.2 Guarantees Outstanding O as of Marc ch 31, 2012 (Rs. Billion) ) Outstandin ng Guarantees s extended 487 7 to PSEs -Domest tic Currency 256 6 -Foreign n Currency 231 1 Memo: Foreign Cu urrency (US$ Million) M 2,544 4 Source: De ebt Policy Coordination Offic ce

9.2.1 Dynamics D of Public P Debt Burden B Borrow wing domestic cally or exter rnally is a no ormal, indeed, necessary part p of econo omic activity y. The mic rationale e for debt creation is that econom borrow wers can earn a higher eco onomic return n than the cos st of invested d funds and th hat these econ nomic returns s can then be translated t into o financial re eturns. Debt problems p for r governmen nts arise if debtservicin ng capacity does d not keep p pace with gr rowth of deb bt. This may y also be expressed e as debt exceed ding sustainab ble levels. The level of debt depends on the t debt serv vicing ty of the eco onomy i.e. ex xport earning gs and capacit revenu ue generation n. The debt t burden ca an be express sed in terms of the stock k ratio i.e. de ebt to GDP, external e debt to GDP or flow fl ratios i.e. debt to rev venue, extern nal debt to foreign exch hange earning gs. It is com mmon practic ce to measur re the public debt burden n as a perc centage of GDP; er, it makes more sense e to measure e debt howeve burden n in terms of flow ratios s because ea arning potenti ial reflects more m accurate ely on repay yment capacit ty as GDP changes do not fully translat te into revenu ues, particularly in case of Pakistan P whe ere the taxation systems are a inelastic and the tax xation nery is weak. machin

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Pakistan Economic Survey 2011-12

Table-9.3 Dynamics of Public Debt Burden Public Debt to GDP Real Growth of Public Debt Real Growth of Revenues Real Growth of Public Debt Burden Real Growth of GDP 2007 60.1 2.3 11.9 -9.7 6.8 2008 59.1 8.3 -0.6 8.9 3.7 2009 59.7 5.2 2.9 2.3 1.7 2010 60.4 4.3 0.3 4.0 3.8 2011 59.4 1.1 -8.4 9.5 2.4 2012* 58.2 2.4 1.5** 0.9 3.7

Source: Budget Wing, SBP and Debt Policy Coordination Office *End March, 2012 **Growth as compared to same period in 2011

If the primary balance (fiscal deficit before interest payments) is zero and the real growth in revenue is higher than the real growth in debt, the debt burden will ease. Pakistan saw a primary surplus in fiscal year 2004, however, since then it is running a primary deficit. In fiscal year 2009 the government was able to bring the deficit down to 0.1 percent of GDP from 2.5 percent in fiscal year 2008 as a result of fiscal consolidation and rationalization of expenditure. However since fiscal year 2010, owing to increased security expenditure, sustained food and energy subsidies and the great floods of 2010, the fiscal adjustment path was altered and the primary deficit reached 2.5 percent of GDP at the end of June 2011. A similar pattern was witnessed in terms of real growth of revenues; from a high of 11.9 percent in fiscal year 2007 it declined to -8.4 percent in fiscal year 2011. On the other hand a gradual decline in
Table-9.4 Public Debt Servicing 2010-2011
Budgeted Actual

real growth of debt has been witnessed since fiscal year 2008. However, the real growth of debt has been greater than the real growth of revenues; and, this complemented by the primary deficit resulted in increase of the debt burden. The public debt stood at 4.7 times government revenues at the end of fiscal year 2011. Ideally the debt to revenue ratio should be 3.5 or lower. 9.2.2 Servicing of Public Debt Increases in the outstanding stock of total public debt have implications for the economy in the shape of a greater amount of resource allocation towards debt servicing in the future. In order to meet debt servicing obligations, an extra burden is placed on limited government resources and might have costs in the shape of foregone public investment or expenditure in other sectors of the economy.

2011-2012
Budgeted Actual* Percent of Govt. Revenue Percent of Current Expenditure

Percent Percent of of Govt. Current Revenue Expenditure

(In billion Rs.) Servicing of External 76.8 68.4 Debt Repayment of External 174.4 154.2 Loans Servicing of Domestic 621.8 629.7 Debt Servicing of Public Debt 872.9 852.2 Source: Debt Policy Coordination Office * July-March, 2012

% 3.0 6.8 27.9 37.7

% 2.4 5.3 21.7 29.4

(In billion Rs.) 76.3 45.9 243.2 714.7 1,034.2 94.5 578.6 719.0

% 2.6 5.4 33.3 41.3

% 2.1 4.4 26.9 33.4

128

Public Debt During the year 2010-11, servicing of public debt amounted to Rs. 852.2 billion as opposed to a budgeted amount of Rs. 872.9 billion (Table 9.4). The saving of Rs. 20.7 billion has mostly been due to stable dollar rupee parity; which reduced the amount used for interest and principal repayments of foreign loans in Rupee terms. Repayment of foreign loans stood at Rs. 154.2 billion as opposed to a target of Rs. 174.4 billion, while interest payments on foreign loans, which were budgeted at Rs. 76.8 billion, reached Rs 68.4 billion by endJune 2011. An amount of Rs. 629.7 billion was spent on account of servicing of domestic debt against the budgeted estimate of Rs. 621.8 billion. The increase in domestic debt servicing is partly the result of a tight monetary stance taken in order to arrest the monetary overhang caused by previous policies. As at the end of March 2012, servicing of the public debt stood at Rs. 719 billion against the budget amount of Rs. 1,034.2 billion. 9.3 Domestic Debt Pakistans domestic debt comprises permanent debt (medium and long-term), floating debt (shortterm) and unfunded debt (made up of the various instruments available under the National Savings Scheme) having shares of 21.6 percent, 54.5 percent and 23.9 percent respectively in total domestic debt. Banks preference of risk-free sovereign credit in view of mushrooming nonperforming loans augured well for the government securities market and overwhelming participation was witnessed in the auctions of T-Bills, PIBs and Government Ijara Sukuk. The composition of major components shaping the domestic debt portfolio has undergone a transformation from a high dominance of unfunded debt to an increasing dependence on floating component of the domestic debt. The unfunded category comprising about 44.6 percent of the aggregate domestic debt stock in fiscal year 2002 has declined to 23.9 percent by end March, 2012. Contrary to this, the share of floating debt to total domestic debt has reached 54.5 percent by endMarch 2012 as compared with 31.4 percent in fiscal year 2002 indicating an over reliance on shorter duration instruments i.e. 54.5 percent of the total domestic debt has the duration of 0.31 years at end March 2012 which is fairly low owing to market appetite for shorter duration reflecting inflationary expectations and higher interest rates in the second half of the fiscal year 2012. Undue reliance on short-term sources of financing raises the rollover or refinancing risk for the government. Failure to issue new debt in order to mature a large amount of outstanding short term debt may trigger a liquidity or debt rollover crisis. The increase in frequency of such operations (due to their short term nature) coupled with any adverse rise in interest rates may leave the government vulnerable to the high cost of debt. The trends in domestic debt are discussed in the following graph:

Fig-9.3 Trends in Permanent, Floating & Unfunded Debt

3700 3200 2700 Rs. billion 2200 1700 1200 700 200 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12Q3

Permanent Debt Floating Debt Unfunded Debt

129

Pakistan Economic Survey 2011-12 9.3.1 Outstanding Domestic Debt The total domestic debt was positioned at Rs. 7,206.9 billion at end-March 2012, representing an increase of Rs. 1,190.5 billion in the first nine months of the current fiscal year. This increase stems from net issuance of market debt namely Treasury bills (Rs. 576.4 billion) and PIBs (Rs.
Table-9.5 Trends in Domestic Debt 2002 Permanent Debt Floating Debt Unfunded Debt Total Permanent Debt Floating Debt Unfunded Debt Total

307.5 billion). In relation to GDP the domestic debt stood at 34.9 percent which is higher than end-June 2011 level at 33.4 percent. The domestic debt grew by 19.8 percent in first nine months of current fiscal year. The focus on deficit financing through internal sources owing to lower external receipts has been the major cause.

2003

2004

2005

424.8 468.8 570.0 557.8 516.3 542.9 792.1 909.5 899.2 1774.7 1894.5 2012.2 9.7 12.7 18.0 40.3 9.7 10.7 18.9 39.3 10.1 9.6 15.9 35.7 28.3 27.0 44.7 5641

Permanent Debt 23.9 24.7 Floating Debt 31.4 27.3 Unfunded Debt 44.6 48.0 Memo: GDP (in billion of Rs.) 4402 4823 Source: Budget Wing, Ministry of Finance * End-March

2008 2009 2010 2011 2012* (In billions Rs.) 526.2 616.8 685.9 797.7 1125.3 1554.6 778.2 1637.4 1903.5 2398.7 3235.4 3926.9 873.2 1020.4 1269.2 1457.5 1655.8 1725.4 2177.6 3274.5 3858.7 4653.9 6016.4 7206.9 (In percent of GDP) 8.1 6.0 5.4 5.4 6.2 7.5 12.0 16.0 15.0 16.2 17.9 19.0 13.4 10.0 10.0 9.8 9.2 8.4 33.5 32.0 30.3 31.4 33.4 34.9 (In percent of Total Debt) 24.2 18.8 17.8 17.1 18.7 21.6 35.7 50.0 49.3 51.5 53.8 54.5 40.1 31.2 32.9 31.3 27.5 23.9 6500 10243 12724 14804 18033 20654

The following section highlights the developments in the various components of domestic debt during first nine months of the outgoing fiscal year. I. Permanent Debt Permanent Debt mainly consists of medium to long term instruments including Pakistan Investment Bonds (PIBs), Government Ijara Sukuk bond, Prize Bond etc. PIBs are non-callable instruments, with semi-annual coupon payment. PIBs are issued in tenors of 3, 5, 7, 10, 15, 20 and 30 years maturity. The 3, 5 and 10 years tenor are most liquid while longer maturities are thinly traded. Government Ijarah Sukuks are medium term Shariah compliant bonds currently issued in 3 years tenor. The purpose of issuance was to raise money from Islamic banking which has grown substantially in Pakistan in recent years. The total share of permanent debt in the governments domestic debt stood at Rs. 1,554.6 130

billion as at end-March 2012 compared to Rs. 1,125.3 billion in 2011 registering an increase of Rs. 429.3 billion. The share of permanent debt in total domestic debt inched up from 18.7 percent in 2011 to 21.6 percent at end March 2012. Sizeable receipts from Government Ijara Sukuk bond and Pakistan Investment Bonds contributed to this expansion. Government mopped up net of retirement Rs. 80.5 billion through successful auctions of Ijara Sukuk bond and Rs. 307.5 billion through Pakistan Investment Bonds during JulyMarch, 2012. II. Floating Debt Floating debt consists of short term domestic borrowing instruments such as Treasury Bills and State Bank borrowing through the purchase of Market Related Treasury Bills (MRTBs). Treasury Bills are zero coupon or discounted instruments issued in tenors of 3 months (introduced in 1997), 6 months (introduced in 1990) and 12 months

Public Debt (introduced in 1997). The share of 3 months, 6 months and 12 months maturity in total T-Bills portfolio is 9 percent, 20 percent and 71 percent respectively as at end-Mar 2012. In order to raise short term liquidity, the government borrows from the domestic banks through auction in the form of Treasury Bills. The auction of Treasury bills is arranged by the State Bank of Pakistan (SBP) twice a month. Treasury Bills having maturity of 6 months are also created by SBP on average rate of interest of previous auction on need basis. Floating Debt share in overall public debt and domestic debt stood at 32.7 percent and 54.5 percent respectively as at end-March 2012. During July-March, 2012, the floating debt grew by Rs. 691.5 billion or 21.4 percent. Around 58 percent of the total increase in government domestic debt stock was contributed by floating debt instruments during July-March, 2012. Much of the proceeds accrued through Market Treasury Bills (MTBs) as Rs. 576.4 billion was added to the stock of June 30, 2011. On the other hand, government borrowed Rs. 167.3 billion by issuing Market Related Treasury Bills (MRTBs) to SBP. III. Unfunded Debt Unfunded Debt made up of the various instruments available under the National Savings Scheme (NSS). A number of different schemes are offered under NSS in the investment horizon of 3 years to 10 years. The total share of unfunded debt in the governments domestic debt stood at Rs. 1,725.4 billion or 23.9 percent on end-March 2012. The stock of unfunded debt increased by Rs. 69.6 billion or 4.2 percent compared with fiscal year 2011. Net receipts in Regular Income Scheme were up by 17.2 percent in July-March, 2012, as the stock increased from Rs. 182.6 billion in June, 2011 to Rs. 214 billion at end-March 2011. Special NSS Schemes including Bahbood Savings Certificates and Pensioners Benefits Accounts registered a combined nominal increase of Rs. 49.3 billion compared to Rs. 59 billion during JulyMarch 2011. Rates of return on NSS instruments were revised downward in October 2011 and January 2012 in response to the decrease in the benchmark discount rate. 9.3.2 Duration of Domestic Debt As at end March 2012, duration of domestic debt stood at 2 years excluding SBP Market Related Treasury Bills (MRTBs). Duration including MRTBs stood at 1.61 years. This estimate of duration may be a little inconsistent owing to the non-availability of actual maturity profile of NSS and manual operations of Central Directorate of National Savings (CDNS). A behavioral analysis was undertaken to estimate the maturity of NSS instruments. Generally, across the globe, governments desire to incur the lowest annual debt servicing cost while ignoring portfolio risks. It is important for the government to take necessary measures to lengthen the maturity profile of domestic debt. Though this may result in additional debt servicing cost in the short term, it would certainly help in reducing the associated liquidity and refinancing risks in the domestic debt portfolio. 9.4 External Debt and Liabilities Pakistans external debt and liabilities (EDL) include all foreign currency debt contracted by the public and private sector, as well as foreign exchange liabilities of the State Bank. EDL has been dominated by Public and Publically Guaranteed Debt having share of 76 percent owing to current account deficit which is financed through loans from multilateral and bilateral donors. Debt obligations of the private sector are fairly limited and have been a minor proportion of EDL (6 percent). Borrowing from IMF contributed 13 percent in EDL Stock which was intended for Balance of Payment (BoP) support and is reflected in foreign currency reserves of the country. The explicit concessional terms of loans (low cost and long tenors) contracted with international financial institutions or donor countries have concealed the inherent capital loss associated with foreign currency debt to some extent. However, the analysis of currency movement of last 20 years reveals that cost of foreign currency borrowing adjusted for exchange rates movement has been 1.5 percent lower than the average domestic interest rates. Pakistan External Debt and Liabilities (EDL) stock was recorded at $60.3 billion as of March 2012. During July-March 2012, $179 million was added 131

Pakistan Economic E Sur rvey 2011-12 2 DL stock. As A a percenta age of GDP in to the ED dollar ter rms, the EDL L was down n by 200 ba asis points in July-March, J 2012 2 compare ed to fiscal ye ear 2011 and d approximat ted to 26.5 percent. Sin nce fiscal yea ar 2010, EDL L has increased in absolu ute terms, but t decreased in n relation to GDP Howev ver, focusing on the absolute a inc crease in the t outstandin ng stock of EDL E can be misleading for two main reasons. Firs stly, the outst tanding stock k of debt must t be analyzed d in relation to o the size of the t economy and its repay yment capaci ity (in terms of GDP an nd other macroeconom m mic indicator rs). Secondly, , the absolut te change in n EDL negle ects classificat tion between an actual in ncrease in sto ock in and inc creases caused by fluctuations fl internation nal exchange rates.
Fig-9.5: Struc cture of EDL End March, 2012 2
Foreign Ot thers Exchange 6% 6 Liabilities 4% IMF 13% Priva ate Non nGuaran nteed Deb bt 6% % Other B Bilateral 4%

Fig g-9.4 External Public Debt (as perce ent of GDP)

60% 50% 40% 30% 20% 10% 0% Q3-FY12 FY80 FY90 FY95 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

The co omposition an nd structure of f Pakistan Ex xternal Debt as a on March 31, 2012 is s depicted thr rough followi ing graphs:
Fig-9.6 : Components of f EDL End March h, 2012
Sched duled Ban nks' Borrow wing, 1% % Foreign e Exchange Liabilities s, 4%

Paris Club 25%

F, 13% IMF Priva ate Non nGuaran nteed Debt, 6%

l Multilateral 42%

Public and Publically d Guaranteed Debt, 76%

The follow wing section highlights th he developments in the var rious compon nents of EDL during the fi irst nine mont ths of the outg going fiscal year. y I. Public c and Publicl ly Guarantee ed Debt (PPG G) At the end-March e 2012, 2 Public c and public cly guarantee ed debt accou unted for the largest share of 76 percen nt in EDL. Pu ublic and publ licly guarante eed debt is do ominated by the loans fro om bilateral and a multilater ral donors. Multilateral M deb bt, which is the t largest co omponent of Pakistans ED DL witnessed da decrease of $730 mill lion during th he period und der review. The projec ct-based nat ture of loa ans contracted d under this category c hinge es on Pakistan ns ability to o instill proj ject efficienc cy. Debt fro om 132

bilatera al sources in ncludes loan n contracted with Paris Club C countrie es and other countries ou utside the Par ris Club. It is second larg gest compone ent of Pakista ans EDL. It witnessed an n increase of f $137 million n during the period p under review. r II. IM MF Debt At the e end-March h 2012, deb bt owed to IMF aggregated up to $8 8.1 billion. Pa ayment amou unting to $793 million has s been made in the 3rd an nd 4th quarter r of fiscal yea ar 2012.

Public Debt III. Private Non-Guaranteed Debt The share of private non-guaranteed debt in total EDL stood at 6 percent at end-March 2012. The
Table-9.6: Pakistan External Debt and Liabilities
2004 1. Public and Publically Guaranteed debt A. Medium and long term(>1 year) B. Short Term (<1 year) 2. Private Non-guaranteed Debt (>1 yr) 3. IMF Total External Debt (1 through 3) 4. Foreign Exchange Liabilities Total External Debt & Liabilities (1 to 4) (of which) Public Debt Total External Debt (1 through 3) 1. Public and Publically Guaranteed debt A. Medium and long term(>1 year) B. Short Term (<1 year) 2. Private Non-guaranteed Debt (>1 yr) 3. IMF 4. Foreign Exchange Liabilities Total External Debt & Liabilities (1 to 4) 29.9 29.9 0.0 1.7 1.8 33.4 2.0 35.3 31.3 34.1 30.6 30.5 0.0 0.02 1.8 2.0 36.1 2005 31.1 30.8 0.3 1.3 1.6 34.0 1.8 35.8 32.1 31.1 28.4 28.1 0.2 0.01 1.5 1.6 32.7 2006 32.9 32.7 0.2 1.6 1.5 36.0 1.6 37.6 33.9 28.2 25.8 25.7 0.1 0.01 1.2 1.2 29.5 2007 35.3 35.3 0.0 2.3 1.4 39.0 1.5 40.5 2008 40.6 39.5 1.1 2.9 1.3 44.9 1.3 46.2 2009 42.6 41.1 1.5 3.3 5.1 51.1 1.3 52.3 2010 43.1 42.3 0.8 3.4 8.1 54.6 1.3 55.9 49.5 30.9 24.5 24.0 0.4 0.02 4.6 0.6 31.5 2011 46.7 46.1 0.6 3.5 8.9 59.1 1.0 60.1 54.6 28.1 22.1 21.8 0.3 0.02 4.2 0.5 28.5 2012Q3 46.4 45.8 0.6 3.3 8.1 57.8 2.5 60.3 53.1 25.4 20.1 19.8 0.2 0.01 3.5 1.1 26.5

stock of private non-guaranteed debt decreased by $147 million; from $3.48 billion in June 2011 to $3.34 billion by end-March 2012.

36.5 40.9 46.3 (In percent of GDP) 27.3 27.4 31.5 24.7 24.8 26.3 24.7 24.1 25.4 0.0 0.7 0.9 0.02 0.02 0.02 1.0 0.8 3.2 1.0 0.8 0.8 28.3 28.2 32.3 Memo: 10243 62.5 68.3 163.8

GDP (in billion of Rs.) 5641 6500 7623 Exchange Rate (Rs./U.S. dollar, Period Avg.) 57.6 59.4 59.9 Exchange Rate (Rs./US$, EOP) 57.9 59.7 60.2 GDP (in billions of U.S. dollars) 98.0 109.5 127.4 Source: State Bank of Pakistan, EAD and Debt Policy Coordination Office

8673 60.6 60.6 143.0

12724 78.5 81.4 162.1

14804 83.8 85.5 176.5

18033 20,654 85.6 90.8 86.0 90.7 210.8 227.8

9.4.1 Composition of Foreign Economic Assistance The total amount of foreign economic assistance received in the first nine months of 2011-12 stood at $1,660 million. The composition of this assistance is as follows: I. Commitments The commitments of foreign economic assistance were $4,580 million during 2010-11, while during July-March 2012, total commitments amounted to $1,967 million. About 76 percent of total commitments during July-March 2012 were in the shape of project aid while the remaining comprised non-project aid. Out of total non-project aid, share of BOP/budgetary support was 78 percent.

II. Disbursements During July-March 2010-11, disbursements of $1,660 million were for different purposes like Project Aid ($1,113 million), Programmeloans/Budgetary Support ($99 million) and relief ($448 million). Project aid accounted for 67 percent of the total disbursements. 9.4.2 External Debt Servicing During fiscal year 2011, external debt servicing summed to US$ 4,799 million that is 14.3 percent lower than the previous year. A segregation of this aggregate number shows a payment of US$ 2,348 million in respect of maturing EDL stock where interest payments were US$ 963 million. US$ 1,488 million was rolled-over.

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Pakistan Economic E Sur rvey 2011-12 2

Table-9.7 Pakistan's Pu ublic External Debt Servicing Actual Amount Total Amount Rolled Years Paid Over (i in million of US$) U 2006-07 2,326 1,300 3,626 6 2007-08 2,558 1,200 3,758 8 2008-09 3,986 1,600 5,586 6 2009-10 3,880 1,723 5,603 3 2010-11 3,311 1,488 4,799 9 2011-12* 2,325 1,243 3,567 7 Source: Sta ate Bank of Pa akistan *July-Marc ch 2012

f net fresh h disburseme ents, exchang ge rate Apart from fluctua ations in US$ $ against the ese currencie es can also re esult in chang ge in External Debt Stoc ck i.e. appreci iation of US$ against oth her currencies s will result in i decrease in i External Debt D Stock or r vice versa. The total tra anslational ga ain on accou unt of cross-c currency mov vement again nst US$ amo ounted to $1,129 million which can be attribute ed to appreci iation of US $ against ha ard currencies like Euro, Japanese J yen (JPY), SDR by b 7.9 percen nt, 2.0 percent t and 3.2 perc cent respectiv vely. 9.4.4 External E Debt Sustainabil lity Analys sis of the cu urrent accoun nt deficit pro ovides importa ant clues as to the futur re direction of o the externa al debt path. Higher curre ent account in i the absence of offsettin ng increases to t current tran nsfers and no on-debt creatin ng capital flo ows can add to t the stock of o external debt. d Similarly y, any increa ase in interest t rates and exchange e rate e depreciation n will increas se the debt se ervicing cost of the countr ry and will af ffect the sove ereign debt portfolio. p Ex xternal Debt and a Liabilities s expressed as a a percenta age of GDP might m be a co ommon means s of measurin ng the indebte edness of an a economy y, but repay yment capacit ty is more accurately captured thr rough express sing the level ls of debt as a percentage of the econom mys foreig gn exchange e earnings and reserve es. In orde er to ensu ure sustainab bility, govern nment can ass sign threshold d levels to the e debt stock as a ratio of economi ic indicators s and compar rison with in nternational th hresholds pro ovides insight t into a countr rys debt posi ition. During g 2010-11, th he non interest current ac ccount showed d a surplus of o 0.8 percent t of nominal GDP on acc count of im mproved trade e balance (h higher cotton prices) and swelling s inflo ows in remitta ances. This in ndicator show wed a downw ward trend in fiscal year 20 012 by record ding a deficit t of 1.2 perce ent of nomina al GDP com mpared to a surplus of 0.66 percent t of nominal l GDP during g the same period p last yea ar owing to high value of oil o imports. EDL as a perce entage of Foreign F Exch hange gs (FEE) giv ves a measu ure of a coun ntrys Earning debt re epayment cap pacity by co omparing leve els of externa al debt to the t sum of exports, ser rvices receipt ts, and priv vate unrequi ited transfer rs. A general lly acceptable e threshold re equires a coun ntrys

Servicing of external debt d and liabilities during the t first nine months of fi iscal year 2012 amounted d to $3,567mil llion. Out of the total, $1,6 692 million was w paid again nst principal while w interest t payments we ere $633 mill lion. US$ 1,2 243 million was w rolled-ov ver. When com mpared to a stock of appr roximately US$ U 60.1 billi ion at the en nd of fiscal year 2011, the t relatively smaller am mount of interest payments made dur ring the first three quarter rs of fiscal ye ear 2012 sign nal towards the concessi ional nature of most of the t foreign lo oans contracted by Pakistan. Notwithst tanding, with h the IMF-SB BA repayments over next two years, th he servicing will w increase. pact of Excha ange Rate Flu uctuations 9.4.3 Imp Pakistan External Deb bt is contrac cted in multip ple currencies s, however, outstanding o b balance of the ese loans is co onverted into o US$ for repo orting purpos ses. As at end March 2012, 94 percent of o total Extern nal Debt is contracted in 4 major currencies as depicted in i the followin ng graph:
Fig-9.7 Currency Wise Externa al Debt Com mposition (as on o March 2012)
rs Other 6% USD 26% EUR 12%

JPY 30%

SD DR 26 6%

134

Public Debt EDL to remain below 2 times of FEE. Improvement was observed in the EDL-to-FEE ratio, which was 1.3 in fiscal year 2011 compared to 1.5 in fiscal year 2010 at the back of strong workers remittances and a positive turn-around in export earnings. The improvement of this ratio suggests that Pakistans stock of external debt and liabilities is growing at a slower rate than its foreign exchange earnings. During July-March 2012, the ratio stood at 1.7against 1.3 during the same period last year.

Table-9.8 External Debt Sustainability External Debt Indicators 2007 2008 Non Interest Current Account/GDP -3.8 -7.1 EDL/FEE (times) 1.2 1.2 EDL/FER 2.5 4.0 EDL/GDP 28.3 28.2 EDL Servicing/FEE 12.6 11.7 STD/EDL 0.1 2.4 Source: EAD, SBP & Debt Policy Coordination Office * July - March 2012 FEE: Foreign Exchange Earnings; STD: Short-term Debt; EDL: External Exchange Reserves

2009 -4.5 1.5 4.2 32.3 18.0 2.8

2010 -1.4 1.5 3.3 31.5 16.5 1.4

(in percent) 2011 2012* 0.8 -1.2 1.3 1.7 3.3 3.6 28.5 26.5 11.4 10.0 1.0 0.9

Debt and Liabilities; FER: Foreign

A decrease in EDL in relations to Foreign Exchange Reserves reflects the consolidation of foreign exchange reserves and a general improvement of the countrys repayment capacity or vice versa. On the onset of SBA in 2008, the ratio declined to 3.3 in 2009-10 as EDL growth slowed and foreign exchange reserves shored up. The ratio did not improve in fiscal year 2011 mainly because of stagnation in reserves and lower growth in EDL stock. By end-March 2012, the ratio deteriorated slightly to 3.6 compared to 3.3 by end June 2012 mainly because of drawdown on reserves owing to lower Foreign Direct Investments and other non-debt creating flows. A major improvement has been witnessed in EDLto-GDP ratio as it improves from 31.5 percent in fiscal year 2010 to 28.5 percent in fiscal year 2011. By end-March 2012, EDL as a percent of GDP stood at 26.5 percent, thereby showing a decrease of 2.0 percentage points in first nine month of current fiscal year. This improvement is mainly due to faster growth in nominal GDP in relation to slower growth in external debt owing to lower financing from external sources. External Debt Servicing as a percentage of Foreign Exchange Earnings has been declining since fiscal year 2010 and stood at 11.4 percent during fiscal year 2011 owing to strong workers remittances

and a positive turn-around in export earnings. A generally acceptable threshold requires a countrys EDL servicing to remain below 20 percent of FEE. The current levels of servicing are bound to increase as IMF-SBA repayments initiate in fiscal year 2012, that require serious efforts to enhance the export earnings. Pakistans level of Short Term Debt (STD) as a percentage of EDL has historically been lower than most other developing countries. It was just 0.1 percent in 2006-07. Fiscal year 2009-10 has seen an improvement in STD as a percentage of EDL to 1.4 percent which decreased to 1 percent in fiscal year 2010-11. During July-March 2012, the ratio stood at 0.9 percent. 9.5 Pakistans Link with International Capital Market The first ten months of the current financial year witnessed a period of substantial volatility in the global markets, largely as a consequence of fears relating to the Eurozones peripheral economies. The Emerging Market Bond Index (EMBI), a benchmark index for measuring the total return performance of international government bonds issued by emerging market countries, has depicted an increase over June 2011 levels, implying an increase in costs for tapping international debt

135

Pakistan Economic Survey 2011-12 capital markets. However, since January 2012 the EMBI has shown a slight decrease indicating that the debt capital markets might be improving, however, uncertainty with respect to the Euro area remains and continues to affect the credit risk appetite of global investors. In the backdrop of prevailing uncertainty in the global markets, the situation for Pakistan is further affected by concerns over higher commodity prices, consequent energy shortages, flood etc. Given the general risk awareness and volatility prevailing in the international markets, Pakistan has not issued any new debt instrument since 2008. The government plans to tap the global markets once the conditions become more favourable. 9.6 Recent Performance of 2017 And 2036 Eurobonds Pakistan has witnessed an increase in spreads on its 2016, 2017 and 2036 Eurobonds in the first ten
Table-9.9 Selected Secondary Market Benchmarks Ratings Issuer Coupon (%) (Moodys/S&P) Pakistan B3/B7.125 Pakistan B3/B6.875 Pakistan B3/B7.875 Source: Bloomberg, as at May 9th, 2012

months of 2010-11. External factors mainly contributed to the spread performance of Pakistans bonds over the past year, with an overall tightening witnessed since the beginning of 2012. However, levels remain high when compared to levels seen at the beginning of 2010. The Eurobond maturing in 2016 is currently (as of May 9th, 2012) trading at a spread of UST+1098 basis points. The 2017 maturity bond, that had an issue spread of UST+200 basis points, is trading currently at a spread of UST+1157 basis points. The 2036 bond, compared to the issue spread of UST+302 basis points and a spread of 681 basis points last year, is trading currently at a spread of UST+1002 basis points. The following table contains the latest position of bond issued by Pakistan along with their current yields.

Maturity

Spread over UST (bps) Mar 2016 1098 Jun 2017 1157 Mar 2036 1002

Yield (%) 11.714 12.312 13.024

9.7 Conclusion Pakistans public debt position declined slightly in the current fiscal year. A host of internal and external factors contributed to the decline. Higher interest payments, large subsidies specially food

and energy, growing security spending needs, narrow tax base and rising international commodity prices have resulted in large twin account (i.e. fiscal and current account) deficits. Prudent government policy will be necessary to address the issue of public debt.

136

TABLE 9.1 PUBLIC AND PUBLICLY GUARANTEED MEDIUM AND LONG TERM EXTERNAL DEBT DISBURSED AND OUTSTANDING AS ON 31-03-2012
Country/Creditor I. BILATERAL a. Paris Club Countries AUSTRIA BELGIUM CANADA FINLAND FRANCE GERMANY ITALY JAPAN KOREA NETHERLANDS NORWAY RUSSIA SPAIN SWEDEN SWITZERLAND UNITED KINGDOM UNITED STATES Sub Total I.a. Paris Club Countries b. Non Paris Club Countries BAHRAIN CHINA KUWAIT LIBYA SAUDI ARABIA UNITED ARAB EMIRATES Sub Total I.b. Non-Paris Club Countries Total I. (a+b) II. MULTILATERAL & Others ADB IBRD IDA Other EIB IDB IFAD NORD. DEV. FUND NORD. I. BANK OPEC FUND E.C.O T/Bank Total II: Multilateral & Others III. BONDS IV. COMMERCIAL BANKS Grand Total (I+II+III+IV) ($ Million) Amount 60 32 535 6 2,143 1,790 103 7,711 473 115 18 115 78 146 119 9 1,481 14,935 2,672 115 5 457 78 3,326 18,261 11,877 1,535 10,876 868 48 550 213 14 4 30 10 25,157 1,500 44,918 Source: Economic Affairs Division

TABLE 9.2 COMMITMENTS AND DISBURSEMENTS OF LOANS AND GRANTS (BY TYPE)
(US $ million) Project Aid 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 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 (Jul-Mar) Commitment 1,064 1,002 591 887 1,115 4,659 1,580 1,804 1,810 2,035 1,903 9,132 1,979 2,623 1,935 2,219 1,204 9,960 1,822 2,714 2,219 1,351 776 8,882 1,382 523 396 973 700 1,214 2,089 3,250 1,365 2,440 2,296 3,729 2,384 1,504 Disbursement 599 808 676 536 744 3,363 695 903 1,055 1,006 1,223 4,882 1,262 1,312 1,408 1,766 1,895 7,643 1,961 2,079 2,151 1,821 1,552 9,564 1,620 1,263 1,030 741 846 622 918 2,084 1,308 1,565 1,272 1,213 951 1,113 Non-Project Aid Non-Food Commitment 190 121 182 320 174 987 166 161 186 331 390 1,234 663 201 346 43 182 1,435 3 57 1 1 62 0 0 0 0 0 0 0 133 0 125 100 0 0 Disbursement 213 161 103 174 299 950 149 125 93 205 219 791 537 386 451 316 232 1,922 15 23 21 1 1 61 0 0 0 0 0 0 0 0 80 175 100 0 0 Commitment 55 55 73 110 120 413 88 196 163 130 230 807 392 258 134 322 454 1,560 329 279 395 405 578 1,986 185 567 91 40 0 0 0 22 0 0 18 0 0 Food BOP Relief *Total

Disbursement Commitment Disbursement Commitment Disbursement Commitment Disbursement

50 21 66 89 80 306 177 79 245 57 218 776 542 287 136 284 309 1,558 251 258 383 409 622 1,923 270 100 23 114 9 0 0 10 12 0 0 0 0

86 419 16 10 531 146 217 50 413 411 750 1,161 650 284 1,128 2,589 1,089 1,263 1,202 1,225 2,649 1,309 3,947 2,846 397 361

86 419 16 10 531 146 217 50

61 111 293 178 643 155 150 135 130 164 734 132 140 111 105 57 545 19 29 10 2 1 61 2 6 21 0 11 2 0 1 3 2 2 68 1,799 101

61 111 293 178 643 155 150 135 130 164 734 132 140 111 105 57 545 19 29 10 2 1 61 2 2 5 21 8 3 2 1 3 2 2 49 1,101 448

1,395 1,658 973 1,620 1,587 7,233 1,989 2,311 2,294 2,626 2,687 11,907 3,312 3,439 2,576 2,689 1,897 13,913 2,581 3,025 2,681 1,759 2,106 12,152 2,219 1,380 1,637 3,603 1,800 2,479 3,291 4,498 4,151 3,751 6,389 6,744 4,580 1,967

948 1,470 972 1,102 1,301 5,793 1,176 1,257 1,528 1,398 1,824 7,183 2,619 2,342 2,156 2,471 2,493 12,081 2,549 2,600 2,565 2,233 2,801 12,748 2,442 1,750 2,186 2,756 1,920 1,380 2,723 3,357 3,381 3,660 4,688 3,668 2,618 1,660

413 303 211 625 1,139 550 385 1,128 1,880 1,057 755 1,803 1,262 2,058 2,013 3,238 2,305 566 99

Project Aid Includes Commitments and Disbursements for Earthquake Rehabilitation & Construction BOP includes Commitment and Disbursement for IDB Short term and Tokyo Pledges Relief includes Commitment and Disbursement for Afghan Refugees, IDPs and Flood Assistance *Exclusive of IMF Loans

Source: Economic Affairs Division

TABLE 9.3
ANNUAL COMMITMENTS, DISBURSEMENTS, SERVICE PAYMENTS AND EXTERNAL DEBT OUTSTANDING (Medium and Long Term) ($ Million) Debt outstanding (end of period) Fiscal Year *Disbursed 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 2009-10 2010-11 2011-12 (Jul-Mar) .. : Not available * : Excluding grants ** : Excluding IMF 3,425 3,766 4,022 4,427 4,796 5,755 6,341 7,189 7,792 8,658 8,765 8,799 9,312 9,469 9,732 11,108 12,023 12,913 14,190 14,730 15,471 17,361 19,044 20,322 22,117 22,292 22,509 22,844 25,423 25,359 25,608 27,215 28,301 28,900 30,813 32,407 35,182 39,530 41,413 43,069 45,850 44,918 *Undisbursed .. .. .. .. 1,854 1,811 1,914 2,041 2,514 2,586 2,579 2,921 3,087 3,436 4,321 5,242 6,113 7,070 7,372 8,279 9,232 9,461 9,178 9,014 9,806 7,761 8,583 6,164 5,076 3,421 2,860 3,504 3,811 5,392 4,975 5,838 6,277 6,540 7,451 9,634 9,797 9,688 Commitment 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 1,167 3,293 1,747 2,125 3,113 4,507 4,059 3,398 5,792 6,171 4,580 1,967 Transaction during period **Service Payments Disbursement 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 3,099 2,548 1,660 Principal 101 71 107 118 144 141 175 165 234 350 360 288 390 453 513 603 723 691 685 741 782 921 999 1,105 1,323 1,346 1,510 1,600 955 893 1,004 772 971 2,513 1,072 1,424 1,283 1,130 2,566 2,339 1,925 1,070 Interest 81 51 86 79 104 108 136 162 203 234 243 203 244 274 275 303 378 426 440 491 534 592 649 673 752 791 741 723 399 570 663 538 613 702 669 712 819 949 873 756 760 483 Total 182 122 193 197 248 249 311 327 437 584 603 491 634 727 788 906 1,101 1,117 1,125 1,232 1,316 1,513 1,648 1,778 2,075 2,137 2,251 2,323 1,354 1,463 1,668 1,309 1,583 3,215 1,742 2,136 2,102 2,079 3,439 3,095 2,685 1,553 Debt Servicing as % of Export Receipts 43.3 20.6 23.6 19.2 20.2 21.9 27.3 24.9 25.6 24.7 20.4 19.9 23.5 26.3 31.6 29.5 29.9 25.1 24.1 24.9 21.5 21.9 24.2 25.7 25.1 24.5 27.2 27.3 19.7 17.6 18.7 14.3 14.4 25.8 12.0 12.9 12.2 10.2 18.0 15.7 8.6 7.1 Foreign Exchange Earning .. .. 18.1 14.2 16.3 13.7 15.3 11.2 12.0 11.9 10.6 8.8 9.6 10.9 12.9 13.5 15.6 14.7 14.4 14.4 13.7 13.2 15.3 16.2 16.5 16.7 17.6 17.6 13.6 11.9 11.7 8.5 8.1 15.0 6.5 6.9 6.5 5.6 9.8 8.1 5.7 4.4 GDP

1.7 1.3 3.0 2.2 2.2 1.9 2.1 1.8 2.2 2.5 2.1 1.6 2.2 2.3 2.5 2.8 3.3 2.9 2.8 3.1 2.9 3.1 3.2 3.4 3.4 3.4 3.6 3.8 2.6 2.1 2.3 1.8 1.9 3.3 1.6 1.7 1.5 1.3 2.1 1.7 1.3 0.7

Source: Economic Affairs Division

TABLE 9.4 DEBT SERVICE PAYMENTS OF FOREIGN MEDIUM AND LONG TERM LOANS (Paid in foreign exchange)
(US $ million) 2011-12 (Jul-Mar)

Fiscal Year

Kind

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

I. PARIS CLUB COUNTRIES Principal 1 Australia 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 7 Exim Bank (FE) Interest Principal 8 PL-480 Interest Principal 9 CCC Interest Principal TOTAL (II) Interest

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

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

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

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

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

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

0.000 0.000 2.827 3.798 0.603 1.956 1.652 3.029 0.000 0.000 26.405 86.125 0.095 0.197 18.477 31.206 22.174 0.872 48.485 113.895 34.253 18.021 2.486 1.129 0.411 3.511 2.481 6.279 2.844 5.114 0.633 2.635 1.480 2.732 4.597 29.488 0.199 0.727 170.102 310.714 20.148 10.283 0.000 0.000 6.953 2.264 1.787 0.046 1.666 1.165 0.000 2.122 3.853 3.951 1.291 3.015 5.824 17.322 41.522 40.168

0.000 0.000 3.387 3.569 0.715 1.998 1.814 1.276 0.000 0.000 26.804 87.354 0.119 0.083 15.861 18.639 20.098 0.339 48.656 118.509 9.678 8.165 2.513 1.010 0.303 3.457 2.475 6.157 3.126 2.135 0.533 1.980 1.687 1.380 3.565 29.318 0.151 0.651 141.485 286.020 20.148 46.620 0.000 0.000 7.800 2.793 1.785 0.025 82.296 6.212 0.000 2.122 4.224 1.425 1.171 2.994 5.651 16.982 123.075 79.173

0.000 0.000 3.581 3.466 0.711 1.702 2.075 1.018 0.000 0.000 31.301 88.688 0.136 0.067 18.138 18.619 22.712 0.285 56.651 129.489 11.068 6.836 1.504 0.346 0.354 3.244 2.831 6.027 3.578 1.683 0.610 1.987 2.235 1.339 4.078 29.111 0.223 0.143 161.786 294.050 139.269 76.892 0.000 0.000 7.983 2.760 0.100 0.006 180.009 13.976 0.538 4.735 5.594 0.628 1.153 2.976 6.463 16.623 341.109 118.596

0.000 0.000 1.792 1.617 0.446 0.948 1.004 0.413 0.000 0.000 16.910 42.793 0.075 0.026 11.705 8.888 0.280 0.151 53.939 77.584 6.105 3.149 0.241 0.140 0.184 2.950 1.562 2.967 1.974 0.677 0.336 0.945 1.252 0.691 2.249 14.493 0.120 0.073 100.174 158.505 110.895 32.227 0.000 0.000 6.618 2.445 0.100 0.003 1.926 1.397 3.151 1.916 2.664 0.624 1.153 1.592 3.565 8.184 130.072 48.388 (Contd.)

52.337 30.285

26.617 18.284

24.974 17.142

29.404 11.757

35.456 18.733

23.379 15.851

TABLE 9.4 DEBT SERVICE PAYMENTS OF FOREIGN MEDIUM AND LONG TERM LOANS (Paid in foreign exchange)
(US $ million) 2011-12 (Jul-Mar)

Fiscal Year

Kind

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

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 Turkey (EXIM Principal 3 Bank) Interest Principal 4 E.I.Bank Interest ANZ Bank / Standard Principal 5 charted Bank Interest Principal TOTAL (IV) Interest V. GLOBAL BONDS Principal 1 Euro Bonds Interest Principal 2 Saindak Bonds Interest US Dollar Bonds Principal 3 (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 US Dollar Bonds Interest Principal 6 Cash (ST) Interest Principal TOTAL (VI) Interest Principal TOTAL (I+II+III+IV+V+VI) Interest 1 ADB Grand Total (P+I) Note: Exclusive of IMF 265.981 172.738 249.499 110.541 83.452 39.885 7.504 1.751 9.679 1.046 1370.429 179.919 287.173 94.797 97.926 45.063 7.712 2.106 3.208 0.731 245.272 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 2.519 0.685 4.800 0.546 12.900 1.875 0.679 2.592 236.757 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 2.442 0.917 4.561 0.591 25.800 2.776 1.345 3.324 261.303 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 2.482 1.007 4.204 0.571 12.900 0.648 2.094 4.262 330.746 119.058 296.781 111.589 143.618 73.878 8.413 1.951 6.942 3.726 25.000 22.866 811.500 333.068 2.562 0.875 4.935 0.495 0.000 0.000 2.600 3.847 410.229 134.424 276.333 64.780 157.876 72.111 8.554 1.808 6.486 4.623 891.501 44.277 1750.979 322.023 2.472 0.490 4.016 0.517 0.000 0.000 2.492 2.504 0.000 7.996 8.980 11.507 500.000 177.220 0.000 0.000 21.963 3.680 521.963 180.900 2493.546 865.312 3358.858 3.592 0.112 0.000 0.000 2.988 0.402 0.000 0.000 511.695 111.136 225.073 30.585 168.122 82.620 7.793 1.754 6.840 3.585 349.925 18.551 1269.448 248.231 1.923 0.210 4.015 0.599 0.000 0.000 7.525 1.468 50.000 4.061 63.463 6.338 600.000 132.040 0.000 0.000 21.903 1.485 621.903 133.525 2219.374 753.287 2972.661 3.022 0.168 0.000 0.000 0.000 0.000 0.000 0.000 626.773 95.393 172.956 15.464 168.576 82.377 7.775 1.721 9.488 7.126 325.127 28.614 1310.695 230.695 2.447 0.203 3.298 0.526 0.000 0.000 5.277 1.223 0.000 0.000 11.022 1.952 0.000 110.904 0.000 0.000 0.000 0.000 0.000 110.904 1824.612 756.197 2580.809 3.055 0.912 0.000 0.000 0.000 0.000 75.000 2.784 21.903 0.301 0.000 0.000 99.958 3.997 1924.570 521.405 77.082 144.117 13.421 156.904 79.587 6.029 1.249 5.673 3.993 0.000 14.783 834.128 190.115 1.309 0.106 2.166 0.474 0.000 0.096 1.921 0.499 0.000 0.000 5.396 1.175 0.000 85.031 0.000 0.000 0.000 0.000 0.000 85.031 1069.770 483.214

616.115 325.961 2.232 0.723 6.504 0.707 9.959 0.388 0.000 0.939

1766.448 322.616 2.375 0.565 5.178 0.595 0.000 0.000 0.637 1.722

18.695 2.757 155.458 62.023 0 0 21.903 4.594 177.361 66.617 961.069 609.497 1570.566 0.000 0.870 9.585 1.012 0.000 1.410 0.000 0.000

8.190 2.882 155.459 39.181 0 0 21.903 3.326 177.362 42.507 2497.945 700.034 3197.979 0.000 0.866 6.245 0.213 9.286 0.621 0.000 0.000

20.898 5.698 155.458 57.644 0 0 21.903 4.414 177.361 62.058 1048.787 659.909 1708.696 3.111 0.981 0.000 0.000 4.286 0.983 0.000 0.000

34.148 7.608 155.459 91.561 0 0 0 0 155.459 91.561 1400.880 699.531 2100.411 2.945 1.118 0.000 0.000 0.000 0.469 4.286 0.552

21.680 6.488 0.000 145.000 4.527 0.282 21.903 5.684 26.43 150.966 1258.698 805.560 2064.258 2.979 1.077 0.000 0.000 0.000 0.000 4.286 0.856

10.097 5.217 0.000 207.667 4.527 0.282 21.903 5.684 26.43 213.633 1106.288 932.179 2038.467 3.016 0.804 0.000 0.000 4.286 0.474 0.000 6.657

9.6 3.3 970.654 612.789 1583.443

15.5 1.7 2513.476 701.734 3215.210

16.280 7.416 23.7 9.4 1072.464 669.289 1741.753

16.280 10.370 23.5 12.5 1424.391 712.040 2136.431

17.280 11.370 24.5 13.3 1283.243 818.863 2102.106

16.280 9.105 23.6 17.0 1129.870 949.219 2079.089

66.280 7.094 72.9 7.6 2566.406 872.920 3439.326

116.279 2.849 119.3 3.0 2338.675

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1069.770

756.304 760.194 483.214 3094.979 2684.764 1552.984 Source: Economic Affairs Division

TABLE 9.5 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): Non-Paris Club 1. China 2. Kuwait 3. Saudi Arabia 4. Korea 5. UAE Sub-Total (B): Multilateral 1. I DB (ST) 2. IDB 3. IDA 4. ADB 5. OPEC 6. IBRD 7. IFAD Sub-Total (C): Total (A+B+C) Amount (US $ Million) 2007-08 Interest Rate/ Commission(%) Amortization (years) Amount (US $ Million) 138.3 98.3 236.6 3% 2% 1% 15 26 30 800 125.2 205.2 1130.4 5.8 1.25-5.1 0.75+4.9% 1-1.5 &Libor+60bps 2.5 0.75 1 1-18 35 15-24 20 40 4412.4 5779.4 2009-10 Interest Rate/ Commission(%) 0.75 1.2 1.6 2010-11 Interest Rate/ Commission(%) 596.5 287.8 1528.7 1759.7 66.3 173.4 Libor+2.5 Libor+0.55 and 1.5 0.75 1.5 and Libor 6 months + 0.6 Libor+1.85 Libor 6 months + 0.75 1 18-26 35 20-30 20 30 0-5 3.25 1.5 10-15 3 30-40 2008-09 Interest Rate/ Commission(%) 0.75 200bps Amortization (years) 40 20

460.3 12.1 472.4 327.7 40.1 20.0 387.8 352.8 224.2 259.2 1436.8 5.3 36.3 2314.6 3174.8

0.2-1.3 0.0

20-30 20.0

B.

Lending Country/Agency A. Paris Club Countries 1. Germany 2. Japan 3.France 4. Italy Sub-Total (A) Non-Paris Club 1. China 2. Kuwait 3. Saudi Arabia 4. Korea Sub-Total (B) Multilateral 1. IDB Short-term 2. I DB 3. IDA 4. ADB 5. OPEC 6.IBRD 7. IFAD 8. EIB 9. E.C.O. T / BANK Sub-Total (C) Total (A+B+C)

Amount (US $ Million) 20.3 249.4 103.6 373.3 1979.8 49.9 380.0 2409.7 572.3 362.2 508.4 711.8 31.1 18.8 149.5 2354.1 5137.1

Amortization (years) 40 30 20

Amount (US $ Million)

Amortization (years)

237 104 53 394 214 43 100 356

0.01 fixed Libor 6 months +0.25 0

30 15-18 19

B.

6 and Libor 3 months + 1.1 1 fixed 2 and Libor 3 months + 0.5

19-25 25 3-20

2 fixed 1 fixed Libor 12 months + 0.85

18-20 25 1

Libor+2.5 5.1 US SWAP RATE 15 YRS +1.2 0.75 fixed 1.5 and Libor 6 months + 0.6 1.75 fixed 0.75 fixed Libor 6 months + 0.15

1 15-20 35 20-30 20 26 35

220 603 893 261

1 fixed 3.95 and 0.75 fixed 1.5 and Libor 6 months + 0.6 Libor 6 months + 0.75

15 25 18-30 25

10 1987.0 2737.30

Libor 6 months + 1.5

Source: Economic Affairs Division

TABLE 9.5 TERMS OF FOREIGN LOANS/CREDITS CONTRACTED BY PAKISTAN

2011-12 (July-March) 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 Sub-Total (B) C Multilateral 1. IDB Short-term 2. I DB 3. IDA 4. ADB 5. OPEC 6.IBRD 7. IFAD 8. EIB 9. E.C.O. T / BANK Sub-Total (C) Total (A+B+C) 1006.7 1423.0 Source: Economic Affairs Division 41.1 0.75 40 458.4 507.2 1.55 fixed 1.5 and Libor 6 months + 0.6 25 16.23 351.3 351.3 2 Fixed 12-14 65.0 65 0.01 Fixed 30 Amount (US $ Million) Interest Rate/ Commission(%) Amortization (years)

TABLE 9.6
GRANT ASSISTANCE AGREEMENTS SIGNED (US $ million) 2011-12 2002-03 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 13. DENMARK Sub-Total (I) II 1. 2. 3. 4. 5. Non Paris Club Countries China Iran UAE Oman Saudi Arabia Sub-Total (II) 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 (Jul-Mar) 0.3 13.8 50.7 3.9 8.2 158.8 65.4 287.0 278.9 46.0 10.4 21.0 113.5 3.2 0.7 227.5 514.3 829.3 843 374.4 272.7 567.0 1523.6 31.4 67.8 37.3 6.6 41.6 0.1 0.7 0.9 9.4 5.5 68.4 39.8 4.4 1.5 67.7 269.4 136.9 118.9 142.5 377.4 363.4 1046.1 11.3 67.8 5 5 1.3 89.04 1215.3 24.8 1419.54 17.32 10.7

79.0 129.4 -

44.1 647.5 -

321.56

349.58

6.0 100.0 106.0

0.2 50.0 50.2

49.4 -

0.4

249.5

20.63

0.0

0.0

49.4

0.4

0.0

0.0

249.5

20.6

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)

175.0 21.3 0.3 0.3 10.1 11.5 1.2 51.7 20.8 1.5 3.9 111.0 116.4 0.5 1.9

5.0 58.1 9.1 2.5 0.1

25.2 5.5

80.2

3 144.63 0.3 18.48

3 39.76 99.36 26

1.4

43.5

73.7

177.4

74.7

1.5

30.7

80.2

166.41

168.12

11.0 -

2.1 -

1.5 0.5 1.0 1.5 0.1 0.6 28.3 0.1 1.0 1.0 1.0 1.5 5.0 4.0 200.0 0.5 0.5 150.0 -

3.4

1.6

2.2

2.7

6.12

4.76

133.3 -

300.0

10

11.0 447.6

2.1 404.9

945.7

0.3 0.0 398.4 1,418.4

136.7 635.2 301.6 576.2 12.2 609.9 2.7 6.1 4.8 1606.5 1841.6 543.1 Source : Economic Affairs Division

TABLE 9.7 TOTAL LOANS AND CREDITS CONTRACTED

(US $ million) 2011-12 (Jul-Mar)

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. ECOTDB 7. OPEC Fund 8. IDB 9. KPC 10. IDB (ST) Sub-Total (C) Grand-Total (A+B+C)

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

165.8 165.8

245.0

26.0 26.0

0.0

50.0 6.0 198.2 254.2

98.0 138.0 460.4

103.6 20.3 249.4

103.9 237.5 65.0

245.0

12.1 472.5 236.0 236.0 800.0 205.0 125.0 373.3

53.5 394.9 65.0

118.2 118.2 25.0 25.0

355.0 34.3 389.3

322.2 17.0 38.1 133.1 171.2

328.0 20.0 40.0

1979.8 49.9 380.0

213.7 42.6 100.0

351.3

339.2

388.0

1130.0

2409.7

356.3

351.3

268.0 878.0

53.0 691.0 883.4 22.2 50.0

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

173.4 1529.0 1760.0

508.4 711.8 18.8 149.5 31.1 362.2

261.4 603.0 892.6

458.4 507.2 41.1

10.0 15.0 8.0 47.0 1208.0 1352.2 350.0 2049.6 2074.6 115.0 1790.0 2345.1 121.0 10.0 200.0 425.0 3,090.3 3515.7 5.1 224.0 353.0 2314.0 3174.5 66.0 288.0 597.0 4413.4 5779.4 220.3

2495.4 3079.6

572.3 2354.1 1987.3 1006.7 5137.1 2738.5 1423.1 Source : Economic Affairs Division