Finance ministry rebuts news report on $5.5 billion borrowing

ISLAMABAD: The Ministry of Finance has described as misleading and factually incorrect a news reports published in a section of press claiming that the government’s foreign borrowing increased by US$ 5.5 billion during July-Dec 2019 period.

“The contentions of the report are not only misleading, but also against the national interest as the report sends erroneous signals to the markets, which can have potentially negative consequences for Pakistan’s rapidly stabilizing economy,” says the Ministry of Finance in an official statement.

The ministry contended that reporting gross external debt inflows only presents one side of the picture, ignoring outflows on account of repayments, which are the other side of the picture, and a prerequisite to calculate the net or actual increase in external indebtedness of the country.

“Whereas, the reported gross disbursement was US$ 5.5 billion during Jul – Dec 2019, deducting the US$ 3.8 billion which the government paid back during the said period leaves a net figure of US$ 1.7 billion. Therefore, the real addition was US$ 1.7 billion, not US$ 5.5 billion as claimed by a section of the press.”

It further maintained that the government recorded net inflows in multilateral and bilateral debt while there was a net retirement of commercial loans / Eurobonds during July-Dec 2019, depicting enhanced debt sustainability. “It is also important to highlight that the growth in gross external inflows were recorded at 31 percent during Jul – Dec 2019 when compared with the same period last year, instead of 156 percent as claimed by the section in the press,” it added.

The Ministry further clarified that gross external public debt inflows during FY 2018-19 were recorded at $ 10.5 billion and not US$ 16 billion as claimed by a section of the press. Similarly, the government repaid US$ 7.4 billion during last fiscal year, resulting in net increase of US$ 3.1 billion in external public debt and not US$ 16 billion as claimed.