KARACHI: The government debt stocks (domestic and external) continued to surge, reaching historic level of Rs 36.6 trillion in February 2021, primarily due to rising government borrowing from domestic market.
The State Bank of Pakistan (SBP) Monday reported that the central government (public) debt increased by 4.2 percent during the first eight months (July-Feb) of this fiscal year (FY21).
According to the SBP statistics, the debt stocks rose to all-time high level of Rs 36.613 trillion at the end of Feb 2021 compared to Rs 35.107 trillion till the end of June 2020, depicting an increase of Rs 1.506 trillion.
Analysts said that the entire increase in the public debt came from the government’s domestic borrowing for deficit financing as the federal government is continually borrowing from banks and financial institutions to finance the fiscal deficit. “The government is still dependent on the domestic borrowing as the overall revenue is less then expenditure,” they added.
According to SBP, the government’s domestic debt mounted up by 6.43 percent during the July-Feb of FY21. With current increase, the government’s domestic debt stood at Rs 24.781 trillion in Feb 2021 up from Rs 23.283 trillion in June 2020.
However, the country’s external debt slightly increased by Rs 8 billion during the first eight months of this fiscal year to reach Rs 11.832 trillion mark in Feb 2021. The federal government’s domestic long-term debt, rose by Rs 1.75 trillion or 10 percent to reach Rs 19.454 trillion at the end of Feb 2021 compared to Rs 17.704 trillion in June 2020.
The domestic short-term debt of the federal government declined by Rs 252 billion or 4.5 percent to Rs 5.326 trillion in Feb 2021 as against Rs 5.578 trillion in June 2020. The government has set a budget deficit target for FY21 at Rs3.43 trillion or 7.5 percent of GDP.
Copyright Business Recorder, 2021