KARACHI: The cash-strapped federal government borrowed over Rs2.6 trillion from the banking system for budgetary support during this fiscal year (FY23).
According to the State Bank of Pakistan (SBP), the federal government borrowing for budgetary support increased by 259 percent to cover the fiscal deficit. The federal government has borrowed Rs 2.6 trillion from the banking system including the SBP and commercial banks between July 1, 2022 and March 11, 2023 against Rs 723.2 billion in the same period of last fiscal year (FY22), depicting an increase of Rs 1.88 trillion.
Analysts said that rising funding requirements compelled the government to borrow more from the domestic banking system to finance the fiscal deficit as the external inflows are delayed.
Jul-Jan: $6.134bn borrowed from multiple sources
Although the government is making efforts for the release of the pledged foreign inflows, however, still there is slow progress, of which the federal government is massively raising funds from the domestic banking system.
The detailed analysis revealed that during the period under review most of the amount was borrowed from banks. The federal government borrowing for budgetary support from the scheduled banks rose by 253 percent or Rs 1.437 trillion reaching Rs 2.006 trillion in March 2023 up from Rs 568.23 billion in June 2022.
The federal government borrowing for budgetary support from the SBP also moved up by 285 percent or Rs 442.4 billion to Rs 597.43 billion during July 1 2022 to March 11, 2023 compared to Rs 155 billion in the corresponding period of last fiscal year.
As against the federal government, provincial governments returned a significant amount to the SBP and scheduled banks. During the period under review, Balochistan government retired Rs 29.651 billion, Khyber Pakhtunkhwa Rs 19.699 billion, Punjab government Rs 191.261 billion and Sindh repaid Rs 5 billion to the SBP.
Cumulatively, the federal and provincial governments borrowed Rs 2.2 trillion during July 1, 2022 to March 11, 2023 for budgetary support from the domestic banking system compared to Rs 243.4 billion in the same period of last fiscal year.
With the current surge, the overall stocks of borrowing for budgetary support reached the Rs 20.7 trillion in the second week of March up from Rs 18.528 trillion at the end of June 2022.
Copyright Business Recorder, 2023
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