Statement of Contingent Liabilities-Updated
The Statement of Contingent Liabilities-Updated is part of the federal budget for FY 2021-22. This page reproduces the text of its 3 PDF pages, extracted automatically from the official PDF published by the Finance Division, Government of Pakistan.
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Page 1
Government of Pakistan
Finance Division
(Debt Policy Coordination Office)
*******
Subject: STATEMENT OF CONTINGENT LIABILITIES OF THE FEDERAL GOVERNMENT
Contingent liabilities of Pakistan are primarily guarantees issued on behalf of
Public Sector Enterprises (PSEs). The sovereign guarantee is normally extended to improve
financial viability of projects or activities undertaken by the government entities with
significant social and economic benefits. It allows public sector companies to borrow money
at lower costs or on more favourable terms and in some cases allows to fulfil the requirement
where sovereign guarantee is a precondition for concessional loans from
bilateral/multilateral agencies to sub-sovereign borrowers.
2. The volume of new government guarantees issued during a financial year is
limited under Fiscal Responsibility and Debt Limitation Act which stipulates that the
government shall not give guarantees aggregating to an amount exceeding two percent of
the GDP in any financial year including those for rupee lending, rate of return, outright
purchase agreements and other claims and commitments provided the renewal of existing
guarantees shall be considered as issuing a new guarantee.
3. During July to September 2021, the government issued fresh/rollover
guarantees/Letter of Comforts (LoCs) aggregating to Rs 64 billion or 0.1 percent of GDP. Total
executed guarantees were Rs 2,805 billion while outstanding stock was Rs 2,472 billion at end
September 2021 as per the following details:
Table-1: Summary of Outstanding Government Guarantees
(All figures are Rs in billion unless otherwise stated)
Outstanding Total
Guarantees Guarantees
Domestic 1,564 1,709
External 908 1,096
Total 2,472 2,805
Memo:
External (US$ in million) 5,321 6.423
Exchange Rate (Pak Rupee/US Dollar) 171 171Page 2
4. Sector-Wise, Entity Wise and interest rate wise share of the guarantees at end
September 2021 are as follows:
Table 2: Outstanding Position of GoP Guarantees
Rs in billion % Age
Sector Wise Breakup
Total Outstanding Stock 2,472 100%
- Power Sector 2,055 83%
- Aviation 214 9%
- Financial 66 3%
- Manufacturing 45 2%
- Oil & Gas 50 2%
- Others 42 2%
Entity Wise Breakup
Total Outstanding Stock 2,472 100%
- PHL 915 37%
- PAEC 829 34%
- PIACL 214 9%
- Sindh Engro 69 3%
- NTDC 58 2%
- Others 388 16%
Interest Rate Type
Total Outstanding Stock 2,472 100%
- Floating Rate 1,653 67%
- Fixed Rate 820 33%
Note: The original maturities of major portion of Guaranteed Debt Stock were 5 years and above
5. Guarantees issued against commodity operations are not included in the
stipulated limit of 2 percent of GDP as the loans are secured against the underlying
commodity and are essentially self-liquidating. These guarantees are issued against
the commodity financing operations undertaken by TCP, PASSCO, and provincial
governments. The outstanding stock of commodity operations was Rs 718 billion at
end September 2021.Page 3
6. The estimates of guarantees to be issued from October 2021 till June
2022 i.e. remaining period of FY 2022 are as follows:
Table 3: Estimated Guarantees Issuance and Stock (FY22)
(Rs in billion)
A Opening Guarantees Stock (01-10-2021) 2,805
B New Guarantees to be Issued (Oct 21 - Jun 22) 493
- Public Private Partnership (PPP) 28
- Roosevelt Hotel 5
- Pakistan Steel Mills (PSM) 3
- National Transmission and Despatch Company (NTDC) 4
- Jamshoro & Lakhra Power Plants 20
- Pakistan International Airline (PIA) 17
- WAPDA 50
- National Electronics Complex of Pakistan (NECOP) 5
- Misc 5
Others
- Kamyab Pakistan Program (KPP) 40
- Kamyab Jawan (Youth Enterprise Scheme) 10
- Other Guarantees 306
C Estimated Repayments against Existing Guaranteed Loans 120
D=B-C Net Issuance of Guarantees (Oct 2021 - Jun 2022) 373
A+D Estimated Closing Guarantees Stock (30-06-2022) 3,178
Note
(i) Rollover/refinancing against existing allocated limits to PSEs is not included in the above information;
(ii) External guarantees are converted into PKR at exchange rate of 171/USD as applicable at end September
2021. Therefore, valuation of external guarantees is subject to future exchange rate movements
7. Barring the change in value of external guarantees due to exchange rate
movements, Government is committed to adhere to the ceiling as specified in the table
above during October 2021 till June 2022.