World Bank says Pakistan’s external debt stock rose to over $108 billion in 2020

KARACHI: Pakistan’s accumulated debt stock rose by 7.6 percent to $108.53 billion in 2020 from $100.83 billion a year before that, said a study conducted by the World Bank on Monday.
The global lending agency said its report, International Debt Statistics 2022, showed the debt vulnerabilities of low-income countries had significantly increased as a result of the COVID-19 pandemic.
Pakistan was among the top 10 countries that became eligible for debt relief under the Debt Services Suspension Initiatives announced by the G20 creditors after the emergence of the pandemic.
Data presented in a tabulated form in the report showed the overall rise in the country’s debt last year.
“Net inflows from other private creditors rose 15 percent in 2020 to $14 billion but were highly concentrated and also reflected rollovers and extension of new credits by commercial bank loans to Pakistan in the context of the IMF program,” the report added.
Pakistan’s debt stock was $63.09 billion in 2010 which rose to $93.5 billion by 2018, up by 48 percent while stock of debts rose by 16 percent between 2018 and 2020, according to the figures quoted in the World Bank report.
The external debt stock of low- and middle-income countries in 2020 rose, on average, by 5.6 percent to $8.7 trillion.
However, for many countries the increase was in double digits.
The external debt stock of countries eligible for the G-20 debt service initiative rose on average by 12 percent to $860 billion. In certain cases, the increase was even recorded at 20 percent or more.
For most countries, the rise in external indebtedness was not matched by the growth of gross national income (GNI) and exports, the report informed.
The external debt-to-GNI ratio of low- and middle-income countries’ rose to 42 percent in 2020 from 37 percent in 2019 while their debt-to-export ratio increased to 154 percent in 2020 from 126 percent in 2019.
Governments around the world responded to the COVID-19 pandemic with massive fiscal, monetary, and financial stimulus packages.
“While these measures were aimed at addressing the health emergency, cushioning the impact of the pandemic on the poor and vulnerable and putting countries on a path to recovery, the resulting debt burden of the world’s low-income countries rose 12 percent to a record $860 billion in 2020,” said a World Bank statement.
Even before the pandemic, many low- and middle-income countries were in a vulnerable position, undergoing a slowdown of economic growth and public and external debt at elevated levels.
Taken together, external debt stocks of low- and middle-income countries rose by 5.3 percent in 2020 to $8.7 trillion.
“We need a comprehensive approach to the debt problem, including debt reduction, swifter restructuring and improved transparency,” said David Malpass, the president of the World Bank Group in a statement, adding: “Sustainable debt levels are vital for economic recovery and poverty reduction.”
Overall, in 2020, net inflows from multilateral creditors to low- and middle-income countries rose to $117 billion, the highest level in a decade.
Net debt inflows of external public debt to low-income countries rose by 25 percent to $71 billion, also the highest level in a decade.
Multilateral creditors, including the International Monetary Fund, provided $42 billion in net inflows while bilateral creditors accounted for an additional $10 billion.

World Bank says Pakistan’s external debt stock rose to over $108 billion in 2020