The national debt under Pakistan Muslim League-Nawaz (PML-N) government has piled up in three months to an unprecedented level and added Rs980 billion in its debt stock, taking the total debt to approximately Rs15 trillion.
The amount is exclusive of the loan obtained from the International Monetary Fund (IMF), aimed at averting a looming balance of payment crisis, according to figures released by the State Bank of Pakistan. The IMF loans are treated as the obligation of the SBP.
By end June of this year, the central government’s total debt was Rs14 trillion that increased to Rs14.98 trillion by end September, showing an increase of Rs980 billion or 7%, said the SBP.
Finance Minister Ishaq Dar, who was critical of the last Pakistan Peoples Party (PPP) government for doubling the country’s debt burden in just five years, himself has borrowed an average Rs10.9 billion a day, either to finance his government’s budget deficit or retire the earlier loans borrowed by the successive governments including his party’s two stints in power. The previous government was borrowing on average Rs3 billion to Rs4 billion a day.
The increasing debt burden will also augment the cost of the debt servicing, further thinning out the budgetary allocations. The debt servicing consumes the largest chunk of the budget followed by defence budget, both explicit and implicit.
Massive accumulation of the debt and subsequent borrowings from commercial banks and SBP have not only crowded out the private sector debt but is also fuelling inflation. The inflation in October accelerated to 9.1%.
According to the SBP, the domestic debt increased from Rs9.52 trillion to Rs10.16 trillion in just three months, showing an increase of Rs635 billion or 6.7%. Within the domestic debt, the short-term debt ballooned by Rs611 billion or 11.7%.
In June, the short term debt was Rs5.2 trillion that increased to Rs5.8 trillion, according to the SBP. In the short-term debt, the biggest jump came in the market treasury bills which were floated for making replenishing cash, as the commercial banks refused to reschedule their loans, seeing a desperate borrower in the government and on the anticipation of increase in interest rates under the IMF programme.
The debt under the market treasury bills for replenishment of cash increased from Rs2.27 trillion to Rs3.1 trillion, depicting a net increase of Rs750 billion or 33%.
The external debt also increased by Rs325 billion or 7.3%. As against June 30 level of Rs4.48 trillion the external debt increased to Rs4.83 trillion, according to the SBP. Out of the total external debt, the major increase was in the long-term debt that increased from Rs4.48 trillion to Rs4.8 trillion, showing a jump of Rs325 billion or 7.3%.
About 7% devaluation of local currency against the US dollar was the main reason behind massive jump in the long-term foreign debt. The SBP stated that by end June the US dollar was equal to Rs99.20 that devalued by Rs6.90 to Rs106.1 a dollar by end September.
Published in The Express Tribune, November 5th, 2013.
COMMENTS (14)
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dheeray bhaion dheeray stop critcising govt everytime. Major portion of 1 trillion was used to pay off circular debt thats why electricity production have increased in the country !!!!!!
Within two or three years, our government declare Pakistan as insolvent and bankrupt. Total system collapse and all pending projects have their natural death. While Pakistan enters the black hole, the politicians settle in foreign countries with the money looted here.
When Mush was forced to leave the office what was the dollar exchange rate? When the interim govt took over the dollar rate spiraled in the wrong direction. Now nice months after PPP left what is the exchange rate? This is the fasted progress (negative) in the history of Pakistan without war or any national disaster. After increasing the energy prices to max in civilian's benefit what is a trillion here and there? We live in fool's paradise and think one man would be like God with a team of angles would change our plight.
At this rate the country will be put on sale but considering the prevailing conditions, there will be no buyer. However, China might opt to make Pakistan as its 24th province without paying a dollar.
In short....Government sucks...
Great. Roshan Pakistan ;)
Mughal life style of the rulers will suck Pakistan to last drop before they leave their offices.
PPP has shown how to waste money and also how to pay off the circular debt? Salams
The misery will end once this government leaves office. The people know, the army knows it, PML (N) know it. And the only way that will happen when people will come out on the streets. 6 months into running a country and not a plan to reinvent a single industry, let alone lead a country. The corporate sector gives about 45 days to shape up or ship out. That is the standard we need here
PML N will destroy the country and the economy of Pakistan,Nawaz is well secured himself and the family.