External debt servicing to foreign exchange earning ratio dropped to 8.5%

 

ISLAMABAD : Decline in external debt payments with strong growth in remittance has improved debt servicing capacity of the country.

“The external debt servicing (EDS) to foreign exchange earnings (FEE) ratio dropped to 8.5 per cent in FY 2014-15 from 12.9 percent last year,” according to sources.

The sources said other measures of debt servicing capacity that is, EDS-Foreign exchange earning ratio also declined during the period.

They said that fall in Pakistan’s external debt was visible in almost all the external debt sustainability indicators in the current financial year.

Generally, they said there were two types of indicators to access the country’s ability to make repayments of external debt, solvency indicators and liquidity indicators.

Solvency indicators included external debt to gross domestic product (GDP) ratio, which showed debt bearing capacity of the country, and external debt servicing to forex earning ratio, which showed debet servicing capacity, they added.

The repayments of rescheduled Paris Club debt under Official Development Assistance (ODA) will start from FY 17, while the repayment of ongoing Extended Fund Facility (EFF) programme with International Monetary Fund (IMF) will begin in FY 18 , five years Euro Bond issued in April 2014 (US $1 billion) will mature in FY 19 and Sukuk bond issued in November 2014 will mature in FY 20, they said.

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