External debt declared $15b below IMF figures

Chunk of $5.8b was repaid in 2013, $4.1b in 2014 and the remaining $3.1b last year, says Finance Minister Ishaq Dar

ISLAMABAD: Amid concerns over the government’s move to hide actual burden, the government claimed on Wednesday that external public debt stood at $53.1 billion– an amount which is roughly $15 billion less than that shown in IMF documents.

Finance Minister Ishaq Dar in a written reply to the Senate stated that the external public debt stood at $47.8 billion when the present government came into power.



“The debt has been increased to an amount of $53.1 billion as of end-January this year”, according to the written statement.

According to the minister, the value of foreign loans received by the government during the last three years stood at $20.8 billion out of which it repaid $12.9 billion during last three years. A major chunk of $5.8 billion was repaid in 2013, $4.1 billion in 2014 and the remaining $3.1 billion in the last year.

In what appears to be a gimmick, the government said that the average cost of borrowings of $20.8 billion stood at 1.62% in 2013, 1.72% in 2014 and 1.92% in 2015. It did not separately mention the borrowing cost of dollar-denominated Euro Bonds that the government floated at extremely high rates in the range of 7.25% to 8.25%.



However, the $53.1 billion external debt amount that the government mentioned in its statement does not truly reflect the actual debt burden. A latest IMF report puts the external debt burden at around $68 billion.

The government has excluded non-plan loans and publically guaranteed debt from the definition of external public debt. For instance $6.4 billion loan contracted for Karachi Nuclear Power Plants is not included in the external debt. Out of which over $1 billion has already been obtained but is not included in the $53.1 billion.

Similarly, in its debt statement for 2015-16, issued last month, the government also tried to hide the rapid growth of external debt and liabilities in comparison to its foreign exchange earnings by excluding liabilities.

Published in The Express Tribune, March 3^rd, 2016.