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KARACHI: The federal government’s borrowing from domestic and external resources rose by 22.5 percent during the first 10 months of this fiscal year (FY23).

According to State Bank of Pakistan (SBP), the central government’s total domestic and external debt stocks surged to an all-time high level of Rs 58.6 trillion by the end of April 2023 compared to Rs 47.832 trillion as of June 2022, depicting an increase of Rs 10.766 trillion.

The central government’s domestic borrowings increased by 17 percent or Rs 5.464 trillion to Rs 36.549 trillion in April 2023 as against Rs 31.085 trillion in June 2022.

Govt debt stocks soar to record Rs57trn by Mar-end: SBP

During the period under review, the external debt in rupee terms rose by 32 percent. The total stocks of external debt surged to Rs 22.049 trillion at the end of April 2023 up from Rs 16.747 trillion in June 2022, showing an increase of Rs 5.3 trillion.

The massive surge in the external debt is attributed to sharp devaluation of Pak Rupee to the US dollar. US Dollar, last day Weighted Average Customer Exchange Rates was 204.3784 in June 2022, while it stood at 283.8366 in April 2023.

Year on Year basis, the federal government’s borrowing increased by 34 percent. The present coalition government was set up in April 2022 and overall, during the last one year the federal government borrowed Rs 14.894 trillion from domestic and external resources. With current increase, the federal government’s total debt stocked rose from Rs 43.705 trillion in April 2022 to reach Rs 58.6 trillion in April 2023.

During the last one year, domestic borrowing rose by Rs 7.635 trillion and external borrowings Rs 7.259 trillion, the SBP reported.

The government’s domestic borrowings were dominated by long-term loans worth Rs 29.195 trillion and Rs 7.215 trillion short term borrowing.

Analysts said the country’s debt profile is rapidly increasing because of lower revenue collection and rising expenditures. In absence of foreign inflows, the government’s complete reliance is on domestic borrowing to finance the fiscal deficit.

The federal government is facing a serious financial crunch and looking for fresh foreign inflows to build the depleting foreign exchange reserves, which stood at $ 9.5 billion including $4 billion of SBP and $5.4 billion of commercial banks.

Copyright Business Recorder, 2023

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Yaseen Jun 06, 2023 09:31am
34% increase in debt YOY basis but state of economy has deteriorated further. We are heading towards a disaster.
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