KARACHI: The federal government’s total debt stocks rose to Rs 69.6 trillion mark at the end of July 2024 primarily due to borrowing from domestic and foreign sources to finance the fiscal deficit.
The State Bank of Pakistan (SBP) on Thursday reported that the central government’s total debt (domestic and external) increased by 1 percent during the first month of this fiscal year (FY25).
Overall, the federal government’s total debt stock crossed the Rs 69 trillion mark and surged to an all-time high level of Rs 69.604 trillion by the end of July 2024 compared to Rs 68.914 trillion as of June 2024, depicting an increase of Rs 690 billion just in a month.
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During the period under review, a major surge was witnessed in the domestic debt stocks. The central government’s borrowings from domestic resources mounted up by 1.1 percent or Rs 537 billion to Rs 47.697 trillion in July 2024 up from Rs 47.160 trillion in June 2024.
The government’s domestic borrowings were dominated by long-term loans worth Rs 36.941 trillion and Rs 10.638 trillion short term borrowing.
The external debt in rupee terms rose by 0.7 percent or Rs 153 billion during the first month of this fiscal year. The total stocks of external debt rose to Rs 21.907 trillion at the end of July 2024 as against Rs 21.754 trillion in June 2024. According to the SBP, US dollar, last day Weighted Average Customer Exchange Rates was Rs 278.3668 in June 2024, while it Rs 278.7742 in July 2024.
Analysts said that in absence of the external borrowing, the federal government is relying on domestic resources to meet its financial requirements.
In the first quarter of this calendar year, Pakistan has successfully completed the IMF Standby Arrangement (SBA) of $3 billion to build the sliding foreign exchange reserves and reduce the pressure on external accounts. In addition, the IMF has also approved a $7 billion long term loan programme to further support Pakistan’s economy. The arrival of these and other expected foreign inflows will increase the country’s external debt burden.
On Year on Year basis, the central government’s total borrowing from domestic and external resources rose by 12.66 percent or Rs 7.827 trillion, as the federal government’s total debt stock stood at Rs 61.777 trillion in July 2023.
It may be mentioned here that currently, the country’s total foreign exchange reserves stood at $ 14.74 billion including $9.437 billion of the SBP and $5.3 billion of commercial banks. During the week ended on 30-Aug-2024, SBP reserves increased by $ 33 million to US$ 9.437 billion.
Copyright Business Recorder, 2024
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