Investor Presentaiton
%
Chapter VI - Debt, Pension and GPF Liabilities
Rs
77%
26.1%
7.3
Fixed rate debt (% of total)
Debt Re-fixing in lyr (% of total)
Avg. Time to Re-fixing Portfolio (years)
Interest Rate Risk
Punjab's debt has low exposure to interest rates
ATR of the Punjab's total debt portfolio is 7.3 years showing that total loan portfolio will be exposed to interest rate reset after a period of 07
years approx.
Foreign Exchange (FX) Risk
Foreign exchange risk refers to the exposure of the debt portfolio to changes in exchange rate. Govt.
of Punjab's debt is highly exposed to FX Risk as 99% of the total outstanding debt stock is
denominated in foreign currency. However, this seemingly high risk is partially mitigated by two
factors;
99%
Share of Foreign Debt
(as % of total)
i) low interest rates on foreign loans offset the
adverse
consequences of exchange rate
depreciation
ii) overall size of Punjab's debt portfolio is quite
small as a percentage of the provincial GSDP which
implies that repayment burden attributable to
exchange rate depreciation is not too high as
proportion of provincial GSDP
Fiscal Risks
The Government budget is subject to number of fiscal risks included the risks from contingent liabilities arising from guarantees to borrowing
by its public sector companies, public private partnerships (PPPs), natural calamities/disasters and pending court cases. It is therefore
important to track and manage these fiscal
risks. Disclosure of fiscal risks is an
important international best practice.
All such guarantees are categorized as
explicit guarantees for which
Government is legally bound to pay to
the investor directly in case the PSE fails to
honor its obligations. Major beneficiary of the
Domestic borrowing limit assigned by the National Economic
Council (NEC) has so far been used by the Government to offer
Guarantees to various Public Sector Entities (PSES) to
ensure/increase the bankability of their projects.
Government support in the form of Guarantees, in Punjab, is the energy sector (viiQATPL, PTPL) followed by roads & transportation sector.
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