National debt of Pakistan due to Loans Taken by Political governments from 2008-2020
National debt of Pakistan
Let’s talk about the National debt of Pakistan.
Pakistan’s total national debt and liabilities consist of internal debt that is borrowed from Pakistani banks and the people of Pakistan from time to time and the external debt that is borrowed from international banks, funds and governments; former being around $140 billion and the latter being around $112.8 billion in the 2nd quarter of the fiscal year 2020.
Loans Taken by Political governments from 2008-2020
From 2008 to 2013, during Pakistan People’s Party government, Pakistan’s debt increased by 135% and moved from was ₨ 6,500 billion in 2008 to ₨15,096 billion in 2013. Major increase was in internal debt while the increase in foreign debt was 22%, that is, from US$ 42.8 billion to US$52.4 billion.
From 2013 to 2018, during the PML(N) government, Pakistan’s foreign debt increased from US$52.4 billion to US$95.3 billion, an increase of 81.87% whereas the ratio of increase in the internal debt during this period was less as compared to that in the previous PPP government.
From 2013 to 2018, during Pakistan Muslim League (N) government, Pakistan’s total debt moved from ₨15,096 billion in 2013 to around ₨25,000 billion in 2018.
The PTI Government has added Rs11.35 trillion to public debt in around two years (August 2018 to August 2020) by August, 2020. Pakistan’s finance ministry has recently disclosed in August 2020 that the public debt has soared to Rs36.3 trillion.
Current Debt Situation
In March 2020, Pakistan’s Public debt was around US$256 billion or ₨42.8 trillion (more than 90% of GDP which stands at US$264 billion).
The economic indicators as per the World Bank/IMF reports show that Pakistan’s foreign debt will go up to $130 billion by the year 2023. It means there will be an increase of $34.6 billion in the external debt that was at $95 billion in 2018. In other words, the external debt will move from $95.4 billion (in 2018) to $130 billion in 2023.
In PTI government’s initial 15 months, there was an increase of 40 percent in Pakistan’s public debt. This is why the government has now moved towards a new law named as Fiscal Responsibility and Debt Limitation Act (FRDLA) so as to keep borrowing within specific limits in future.
The PTI finance ministry has told the parliament that the total liabilities have moved from Rs29.879 trillion (in 2018) to Rs41.489 trillion (in 2020) – an increase of 39% or Rs11.6 trillion in just 2 years.