Centre’s total debt rose by Rs11.13tr: SBP

The federal government’s total debt increased by Rs11.13 trillion to Rs58.962 trillion (a rise of 23.3%) during the 11 months of the fiscal year 2022-23, according to statistics released by the State Bank of Pakistan (SBP).

The central bank’s data revealed that the domestic debt of the federal government jacked up to Rs37.054 trillion in May 2023 from Rs31.085 trillion -- showing a hike of Rs5.968 trillion (an increase of 19.2%) during the period under review.

Similarly, the federal government’s external debt rose by Rs5.161 trillion to Rs21.908 trillion (a hike of 30.8%) during the 11 months of fiscal year 2022-23.

The central bank’s data shows that the current government depended primarily on borrowing to cover the gap between its high expenditures and low collection of revenue.

The devaluation of the rupee played an important role in increasing the value of loans.

The volume of total loans increased by 40% because of the devaluation of the local currency.

The federal government borrowed 33.89 billion on a daily basis in the first 11 months (in 329 days) of the outgoing financial year.

In this way, a loan of Rs1.40 billion was taken every hour.

The government’s borrowing from commercial banks in the form of treasury bills increased from Rs6.752 trillion to Rs7.367 trillion during the 11 months.

An amount of Rs4.59 trillion was borrowed through the auction of Pakistan Investment Bonds (PIBs). The value of PIBs hit Rs22.27 trillion till May.

The government borrowed Rs505 billion in May alone.

The hike in debt servicing because of heavy borrowings has created serious problems in the budget for the fiscal year 2023-24.

The government will spend at least Rs7.302 trillion on debt servicing, more than half of the total budget outlay of Rs14.460 trillion for the fiscal year 2023-24.

The foreign debt servicing will be to a greater extent than that in the fiscal year 2022-23. The budget document disclosed that the country would spend Rs872.219 billion against Rs510.972 billion allocated for the previous fiscal year. The amount was later revised to Rs725.3 billion as the earlier reserved sum fell short.