Domestic debt, liabilities reach Rs 8.5trn mark

RECORDER REPORT

KARACHI: The stocks of domestic debt and liabilities are on the rise and reached the historic Rs 8.5 trillion mark as on December 31, 2012 mainly due to a rising fiscal deficit and a shortfall in revenue collection.

“A rising fiscal deficit and shortfall in tax revenue collection are major factors responsible for expansion in domestic debt’s stocks,” economists said. They said that during the current fiscal year government’s spending on account of security, subsidies and current expenditures witnessed massive surge, resulting in higher fiscal deficit followed by slow revenue growth.

Although, the government has successfully received an amount of $1.8 billion from US on account of Collation Support Fund (CSF), however still the fiscal deficit is on the rise due to rising current expenditures, they added.

They said that floating debt, which includes three months’ treasury bills and market treasury bills, was key borrowing instrument for government to meet its financial needs, therefore floating debts has also increased.

The State Bank of Pakistan (SBP) on Monday revealed that the country’s overall stocks of domestic debt and liabilities, comprising permanent debt, floating debt, un-funded debt and foreign currency loan, are on the rise during the current fiscal year. The domestic debts and liabilities have registered a growth of 8 percent during first half (July-Dec) of current fiscal year (FY13).

The stock of domestic debts and liabilities have reached new peak level of Rs 8.504 trillion as on December 31, 2012 as compared to Rs 7.88 trillion as on June 30, 2012, depicting an increase of Rs 6.24 billion.

Detail analysts indicated that domestic debts stocks were on the rise, while domestic liabilities posted some decline. With a fall of 27 percent or Rs 67 billion, the totalled government’s domestic liabilities have declined to Rs 175.1 billion in December 2012 from Rs 242.1 billion in June 2012.

Similarly, the country’s cumulative stocks of domestic debt have posted an increase of 9 percent or Rs 690.5 billion during the first half of FY13. Overall domestic debt stocks have surged to Rs 8.329 trillion in December 31, 2012. Economists said that it was expected the stocks of domestic debts would further grow in the upcoming months, as currently the government needs billions of rupees every months.

On the other hand, they said, despite efforts the government has failed to achieve tax collection target.