According to terms agreed between the Government of Pakistan and the IMF, borrowings to meet the budget gap were to be contained to Rs1,130 billion in the second quarter of the current calendar year.
However, the government was not able to refrain from approaching the State Bank of Pakistan (SBP) to fulfill its budgetary requirements. Resultantly, the borrowings for the period under scrutiny rose to Rs1,208 billion.
Pakistan had managed to contain borrowing in the third and fourth quarters of 2009, in line with commitments made to the international lending body. Borrowing for budgetary support from SBP stood at Rs1,047 billion in September 2009 and Rs1,066 billion in December 2009.
Of the cumulative borrowing of Rs1,208 billion at present, loans to the Federal government comprised Rs1,141 billion, while Rs67 billion were owed by provincial governments.
Government borrowing from the central bank has shown no signs of deceleration. In the first two days of the current fiscal year, a whopping Rs43 billion was borrowed by the government from the central bank. Of this figure, the federal government borrowed approximately Rs19 billion while provincial governments racked up new loans worth Rs24 billion from the SBP.
Analysts say that the missing of this target could have adverse effects on Pakistan’s ability to receive fresh tranches from the IMF.
Published in The Express Tribune, July 20th, 2010.
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