External Debt Sustainability Analysis for Pakistan: Outlook for the Medium Term

Sabina Khurram Jafri ()
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Sabina Khurram Jafri: State Bank of Pakistan

No 27, SBP Working Paper Series from State Bank of Pakistan, Research Department

Abstract: This paper estimates Pakistan’s external debt by using Debt Sustainability Assessment (DSA) technique. The main findings of the paper are that as a result of small individual shocks to main components of external debt evolution i.e., real GDP growth, non-interest current account balance to GDP ratio and the ratio of net non-debt creating capital inflows to GDP, the country’s external debt to GDP ratio will increase though, but would remain within safe limits. Secondly a significant 30-40 percent depreciation of the exchange rate has the potential to cause the debt to GDP ratio breach the debt threshold level indentified for Pakistan. Finally, a large combined shock to real GDP growth, non-interest current account balance to GDP ratio, and the ratio of net non-debt creating capital inflows to GDP together will also result in a need for another debt rescheduling. Length: 20 pages

Keywords: External debt; sustainability; Pakistan (search for similar items in EconPapers)
JEL-codes: C02 F34 H63 (search for similar items in EconPapers)
Date: 2008-10
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Citations: View citations in EconPapers (2)

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