Jul-Jan debt rises 6pc as govt borrowing continues

KARACHI: The federal government’s total domestic and external debt stocks rose by 6 percent during the first seven (July-Jan) months of this fiscal year (FY24), the State Bank of Pakistan (SBP) on Tuesday.

Cumulatively, the central government’s total domestic and external debt stocks reached Rs 64.842 trillion at the end of Jan 2024 compared to Rs 60.841 trillion in June 2023, depicting an increase of Rs 4 trillion.

Analysts said that in the absence of sufficient tax revenue, debt burden is gradually increasing as the government is continually borrowing from domestic and external resources to fill the financing gap.

The detailed analysis revealed that, during the period under review, the major increase was witnessed in domestic debt, which rose by 10 percent.

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The federal government’s domestic debt rose to Rs 42.626 trillion in Jan 2024 up from Rs 38.810 trillion in June 2023, showing an increase of Rs 3.816 trillion.

Under domestic debt, long term debt mounted up by 16.4 percent to Rs 34.147 trillion at the end of Jan 2024 up from Rs 29.332 trillion in June 2023. Long term debt included Rs 31 trillion of permanent debt, Rs 2.89 trillion of unfunded debt and Rs 375 billion of foreign currency loan.

During the period under review, short term domestic debt fell sharply 10 percent to Rs 8.375 trillion end Jan 2024.

Similarly, the upward trend was also seen in the federal government’s external debt, which went up by 0.8 percent during the first seven months of this fiscal year. With the current surge, the government’s external debt stocks reached Rs 22.216 trillion at the end of Jan 2024 as against Rs 22.031 trillion in June 2023.

However, on a Month-on-Month basis, central government debt stocks declined by Rs 346.5 billion to Rs 64.842 trillion in Jan 2024 compared to December 2023, in which total debt stocks were Rs 65.188 trillion. The decline was primarily driven from the exchange rate as Pak Rupee appreciated against the dollar. According to State Bank, the US dollar exchange rate was Rs 279.6444 in Jan 2024 as against Rs 286.3905 in June 2023.

Copyright Business Recorder, 2024