KARACHI: The government is planning to tap the Chinese capital market through the issuance of Panda bonds, the Economic Survey of Pakistan revealed on Thursday.

The government plans to diversify its international capital market instrument base through the issuance of various bonds under its Environmental, Social, and Governance (ESG) Framework and also likes to tap the Chinese capital market through the issuance of Panda Bonds, it said.

The government is planning to accumulate more debt, but the size of debt servicing has been increasing alarmingly.

Interest servicing was recorded at Rs2,118 billion during the first nine months of the current fiscal year FY22 against its annual budgeted estimate of Rs3,060 billion. Domestic interest payments were recorded at Rs1,897 billion and constituted around 90 per cent of total interest servicing, which is mainly attributable to a higher volume of domestic debt in the total public debt portfolio.

Domestic debt was recorded at Rs28.076 trillion at end-March 2022, registering an increase of Rs1.811tr during the first nine months of the current fiscal year.

At the end of March, debt from multilateral and bilateral sources cumulatively constituted around 79 per cent of the external public debt portfolio.

In US dollar terms, the revaluation gain owing to the appreciation of the greenback against other international currencies decreased the external public debt stock by around $1.6 billion.

Published in Dawn,June 10th, 2022