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Interest payments to eat up Rs3.06tr


ISLAMABAD:

Pakistan’s interest payments on foreign and domestic debt will further increase by 4.48% during next financial year 2021-22.

The federal government has projected that it will spend Rs3.059 trillion on mark-up payments on domestic and foreign debt in the upcoming fiscal year. In the ongoing fiscal year 2020-21, it will spend Rs2.9 trillion on mark-up payments on domestic and foreign debt.

Of the Rs3.059 trillion earmarked for interest payments on domestic and foreign loans, Rs2.75 trillion will be mark-up on domestic debt and Rs302.5 billion on foreign debt during the next financial year.

For the outgoing year, Rs2.94 trillion had been earmarked to pay mark-up on foreign and domestic loans, but the target was later revised downward to Rs2.85 trillion.

Read: Total public debt stands at Rs38tr

The government paid Rs2.61 trillion mark-up on domestic loans and Rs239.5 billion on foreign debt during the ongoing financial year.

Economists believe that pressure will mount on the foreign currency reserves of the country with the huge debt servicing requirement.

Economic assistance

According to budget documents, external receipts for fiscal year 2021-22 have been projected at Rs2.69 trillion. The government has projected Rs259.9 billion in project loans and Rs438.19 billion in programme loans.

The government had anticipated an inflow of Rs2.15 trillion in external loans in the outgoing financial year, but now according to revised estimates it expected receipts of Rs2.2 trillion.

The government had projected project loans of Rs218 billion. However, it hopes to receive Rs228.8 billion during the ongoing financial year.

The government has projected Rs496 billion in IMF loan for budgetary support in financial year 2021-22. Pakistan does not hope to receive any amount from Saudi Arabia on account of deferred oil payment facility in the next financial year.

Read more: Govt wants to eliminate circular debt: Tarin

The government had projected to receive Rs165 billion from Saudi Arabia on account of deferred payment facility during the current financial year. However, Pakistan did not receive any amount on this head from the kingdom.

From the Islamic Development Bank, the government had estimated receipt of Rs160 billion in the outgoing year, against which it received Rs128 billion.

In the next financial year, Rs560 billion is expected to be raised through the issuance of Sukuk (Islamic bond)/Eurobond. The government also expects to generate Rs779.2 billion from commercial banks in the next financial year.

The government has planned to take nearly $16 billion in gross foreign loans in the next fiscal year to meet requirements of maturing external public debt and finance the budget deficit.

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