Lahore [Pakistan], June 15 (ANI): The domestic and external debt of Pakistan's Punjab province reached Rs 956.4 billion as of June 2021 including a major chunk of Rs 951.2 billion loans obtained from international funding institutions.
According to Dawn, the World Bank Group is the leading creditor with 46 per cent share followed by the Asian Development Bank at 25 per cent. China comes third with 24 per cent and Japan contributes 3 per cents shares in the external debt stock, according to the budget document.
The Punjab government will pay Rs 62.87 billion in debt servicing that refers to the amount of annual payments on account of principal amount and interest, according to the 2021-22 fiscal year's budget document.
The province's debt servicing for the FY 2021-22 is marginal when compared to the size of average annual revenues of the last three years is 3.9 per cent, indicating it a self-sufficient to honour its obligations on account of debt servicing, reported Dawn.
The province's domestic debt consists of cash development loans (CDL's) obtained from the federal government. These are agriculture programme loans at fixed interest rates with an original maturity of 25 years.
The external debt of the province is concessional in nature with an average borrowing rate of 1.41 per cent per annum and average maturity of 8.8 years as of June 21.
In the Punjab province, the Agriculture and Livestock sector leads as the major debtor of the foreign creditors as its share has been recorded as 28 per cent in the total external debt, followed by the transport and communications sector with 24 per cent share, education (22 per cent), Urban and Community Development (12 per cent), governance (6 per cent) and more.
Earlier, the World Bank announced that Pakistan will get only USD 800 million in budget support loans this month as the two largest lenders have postponed approval of another USD 1 billion due to delay in meeting some conditions and deadlock in talks with the International Monetary Fund (IMF).
The World Bank would approve USD 800 million in policy loans on June 28 against the original plan of USD 1.5 billion, sources in the Ministry of Finance told The Express Tribune.
Having high unemployment, poverty and inflation, the Pakistan economy is under stress and the government plans to take nearly USD 16 billion gross foreign loans in the next fiscal year to meet the requirements of maturing external public debt and cover up the budget deficit.
Because of inability to enhance non-debt creating inflows, Pakistan's now 16 billion Dollars gross official foreign currency reserves held by the State Bank of Pakistan (SBP) are largely built through borrowings, which is also a reason for constant surge in foreign loans. This has weakened the country's debt bearing capacity. (ANI)