The government has allocated Rs 163 billion pay off, what the Finance Ministry says, a high cost of Defence Saving Schemes (DSS) issued by previous governments at 18 percent compound tax-free return, official sources told Business Recorder here on Wednesday.
"In the current fiscal year and up till 2009-10 there will be a large increase in domestic debt-servicing. The reason is that from 1996-97 to 1999-2000, the then governments, due to their imprudent fiscal policies, resorted to borrowing through high cost DSS instruments, which are of ten years with a bullet payment," sources said.
"This year, the additional impact on debt servicing was Rs 80 billion, and next year Rs 163 billion will be required just for this particular instrument," they added.
For 2006-07, total current year's expenditure was estimated at Rs 879.8 billion, the main components of which were debt servicing, defence, civil government, grants and subsidies. Revised estimates for 2006-07 were Rs 1033.5 billion, mainly due to domestic debt servicing, subsidies and grants.
For 2007-08, interest on domestic debt is estimated at Rs 318.2 billion, while budget estimates regarding interest on foreign loans have been projected at Rs 56.4 billion against the current budgetary allocation of Rs 48.7 billion.
Repayments of foreign loans have been projected at Rs 62.9 billion for 2007-08 against current year's budget allocation of Rs 56.3 billion. The expenditure on running of civil government for 2006-07, excluding pensions, was budgeted at Rs 127 billion. The revised estimates amount to Rs 111.1 billion.
For the next year, expenditure on this account is estimated at Rs 128.2 billion. Civil and military pensions for 2006-07 were estimated at Rs 43.9 billion, of which Rs 8 billion were for civilian pensioners. For 2007-08, an amount of Rs 46.1 billion is likely to be spent on this account.
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