ISLAMABAD (Eshfak Mughal):- The burden of external debt on Pakistan was surged by around Rs6 trillion due to depreciation of Pakistani Rupee against US Dollar during the tenure of new government led by Prime Minister Shehbaz Sharif.

Sources in the Ministry of Finance told the scribe that the US dollar has been appreciated by almost Rs.45 against Pakistani Rupee during the tenure of new coalition government.

It is pertinent to mention here that the opposition parties had submitted No-Confidence Motion in National Assembly against than Prime Minister Imran Khan on 8th March and on 10 April, Imran Khan was removed from the office of Prime Minister through.

Due to this free fall of local currency against US Dollar has increase the external debt burden on the country unprecedentedly during the tenure of new coalition government.

The external debt and liabilities on Pakistan has been reached to $129 billion on March 31,2022, according to the State Bank of Pakistan. Out of total debt and liabilities, the government external debt has been swelled to $100 billion up to March 31,2022. The external loans of banks were recorded at $5.8 billion and Public Sector Enterprises (PSEs) has been reached to $7.3 billion during the period. The foreign debt stock of the Private Sector has been reached to $11 billion and Debt liabilities to direct investors has been reached to $4.2 billion up to March 2022.

In terms of PKR, the total debt stock of Pakistan was recorded at Rs53 trillion including Rs21.54 trillion of government external debt on March 2022.
The State Bank has weighted average exchange rate Rs183.5 per US dollar for the months of March. Political uncertainty, depreciation of forex reserves due to heavy payments and windup of IMF loan program and some other factors have triggered the situation in forex market.
The government estimates are showing that Rs45 increase in value of US Dollar against PKR during last four and half months, has pushed up the external debt stock by around Rs6 billion without any fresh borrowing.
Experts believe that the wave of PKR devaluation has not only increased the debt burden on the country but also fuelled the inflation rate during the last three months.
They said that the currency devaluation is translated in energy prices which largely contribute in inflation rate.
According to the Pakistan Bureau of Statistic, the inflation rate has been increased from 11 percent to 21 percent during three months.
The data shows that the currency devaluation was main contributor in pushing up the inflation rate at the highest level after 13 years.
Pakistan is in a market-determined exchange rate system in which trade deficit & market influencing news make a lot of impact on currency changes.
While commenting on the situation, former Advisor of Finance Ministry Dr Khaqan Najeeb said that the recent adjustment of PKR is partly influenced by uncertainty due to election results coupled with Fitch downgrade news. Another important factor, is payments of LCs from the high level of imports in May and June 2022, for energy.
It is also important that that SBP intervention to smoothen the disorderly movement is constrained due to low forex reserves position as well as bindings of international considerations.
Lastly Dollar appreciation is also a factor in rupee slide. Forex market may stabilize after expected improvement in trade numbers and revival of IMF Program which could be finalized by end of August.

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