KARACHI: The federal government’s total debt (domestic and external) stocks crossed the Rs 50 trillion mark by the end of October 2022. According to the State Bank of Pakistan (SBP), the central government’s total domestic and external debt stocks rose by 5 percent during the first four months of this fiscal year.
With current increase, cumulatively, the central government’s total domestic and external debt stocks rose to historical level of Rs 50.152 trillion at the end of October 2022 compared to Rs 47.784 trillion in June 2022, depicting an increase of Rs 23.673 trillion.
Economists said that the country’s debt burden is widening because of massive and continued borrowing from the domestic banking system and external resources to finance the fiscal deficit and external deficit. The federal government for the past many months is facing a serious financial crunch and completely relying on borrowing.
The detailed analysis revealed that, during the period under review, the major increase was witnessed in the domestic debt, which rose by Rs 14.636 trillion. The federal government’s domestic debt surged to Rs 32.501 trillion in October 2022 up from Rs 31.037 trillion in June 2022. Domestic debt included Rs 25.69 trillion of permanent debt, Rs 3.11 trillion unfunded debt and Floating Debt of Rs 6.763 trillion.
Similarly, the upward trend was also seen in the federal government’s external debt, which went up by 5 percent or 9.037 trillion during the July-Oct of FY23. The government’s external debt stocks reached Rs 17.65 trillion in October 2022 as against Rs 16.747 trillion in June 2022. The total external debt is composed of RS 17.419 trillion long term and Rs 231.3 billion short term loans. According to State Bank, the US dollar exchange rate for the debt is calculated at Rs 220.42 in October 2022 as against Rs 204.378 in July 2022.
Analysts said that the government is still looking for new financing avenues to avoid default. Recently, the Saudi Fund for Development (SFD) has rolled over $3 billion deposits with Pakistan for another one year. The amount was deposited by the SFD for one year in December 2021 under an agreement between SFD and the State Bank to build the depleting foreign exchange reserves of Pakistan. However, on the request of the federal government Saudi Arabia has extended the term for a $3 billion deposit in the State Bank of Pakistan to support the Pakistani economy.
Copyright Business Recorder, 2022