Depreciation of PKR: Punjab govt’s liabilities surge 4.6pc to Rs1.079trn

LAHORE: For the three-month period ended on December 31, 2021, the Punjab government’s liabilities surged by 4.6 percent (Rs 47.5 billion), increasing from Rs 1.032 trillion to Rs 1.079 trillion mainly due to the depreciation of the Pak rupee.

As per a report released by the Punjab Finance Ministry for the period between October 1, 2021, and December 31, 2021, the domestic loans showed a decline from Rs 4.787 billion to Rs 4.381 billion while the external loans swelled from Rs 1.026849 trillion to Rs 1.074799 trillion.

In the report, it was noted that 99.6 percent of the total outstanding debt stock is denominated in foreign currency and thus the Punjab government’s debt is highly exposed to the fluctuation in foreign exchange. Hence, the government had to bear Rs 43.2 billion extra liability (after using the forex rates of December 31, 2021) on the account of the rupee’s depreciation.

The report pointed out that the above-given debt stock is exclusive of wheat debt amounting to Rs 489 billion (as on December 15, 2021) against the coverage of wheat stock amounting to Rs 122 billion.

A major share of government borrowing comes from the International Development Association (IBA) that is 33 percent (Rs 356,539 million) of the total outstanding followed by Asian Development Bank (ABD) 24 percent (Rs 263,110 million), China 23 percent (Rs 250,423 million), International Bank for Reconstruction and Development (IBRD) 15 percent (Rs 158,008 million), Japan International Cooperation Agency (JICA) 3 percent (Rs 27,524 million), International Fund for Agriculture Development (IFAD) 1 percent (Rs 15,193 million), federal government 0.41 percent (Rs 4,381 million), France 0.36 percent (Rs 3,908 million) and Islamic Development Bank (IDB) 0.01 percent (Rs 94 million).

As per the report, the agriculture and livestock sector remained the major recipient of government borrowing, which amounts to Rs 293,564 million (27 percent of the total outstanding) followed by the transport and communication Rs 258,723 million (24 percent), education Rs 236,173 million (22 percent), urban and community development Rs 130,863 million (12 percent), governance Rs 66,728 million (6 percent), health Rs 49,676 million (5 percent), energy Rs 20,732 million (2 percent), industries and infrastructure Rs 17,991 million (2 percent), tourism Rs 2,873 million (0.3 percent) and environment Rs 1,857 million (0.2 percent).

Copyright Business Recorder, 2022