ISLAMABAD: The National Assembly was informed on Monday that the total public debt stands at Rs41.466 trillion – Rs26.44 trillion domestic and Rs 15.02 trillion external– till September 2021.
In a report, “Debt Policy Statement January 2022” presented in the National Assembly, it was revealed that the reason behind the increase in debt was Rs967 billion for financing of federal primary deficit, Rs2.75 trillion for interest on debt, Rs665 billion is due to exchange rate devaluation effect, and Rs409 billion due to cash buffer and other reasons.
It said that the total public debt stood at 71.8 percent of GDP, while the total debt of the government was 64.4pc of the GDP till June 2021.
“Total public debt was Rs39.861 trillion at the end of June 2021, regarding an increase of Rs3.46 trillion during financial year 2020-21,” it added.
It said that total public debt was Rs39,861 billion at end June 2021, recording an increase of Rs3,462billion during FY 2020-21.
It said that the government borrowing for financing of federal primary deficit was Rs967 billion, which is lower than the federal primary deficit of last fiscal year.
This improvement was supported by increase in tax collection and slowdown in growth of non-interest current spending, it said, adding the slowdown in non-interest spending was primarily driven by expenditure rationalization measures taken by the government.
“These measures have also helped to create the fiscal space for undertaking spending on targeted subsidies, additional spending on health sector, providing social safety nets to protect the vulnerable segments of the society and created additional room for fiscal stimulus package in wake of downturn witnessed as a result of the Covid-19 pandemic,” it added.
According to the report, the other main reason for accumulation of debt was interest payments amounting to Rs2,750 billion, adding interest servicing remained lower than its budgeted allocation of Rs2,946 billion, primarily due to reduction in domestic and international interest rates and relief available in the form of Debt Service Suspension Initiative.
The impact of exchange rate was favourable which reduced the rupee value of external public debt by Rs665 billion and rest of the increase in public debt was mainly due to increase in cash balances of the federal government.
In wake of the government’s commitment to zero borrowing from the State Bank of Pakistan (SBP), a cash buffer was being maintained to meet the short-term liquidity needs. The size of the cash buffer varied as per the liquidity requirements. The “Mid-year budget review report financial year 2021-22” was also laid in the house.
Copyright Business Recorder, 2022
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