For the first time in country's history, the domestic debts and liabilities have crossed Rs 7 trillion mark mainly due to rising fiscal deficit and a shortfall in the revenue collection coupled with high expenditures on security. Economists said that higher fiscal deficit and rising expenditures on security and subsidies are the chief reasons behind massive increase in domestic debts and liabilities in the current fiscal year.
They said that stoppage of foreign assistance from international financial institutions was another reason of the increase in domestic debts. The country is already facing a higher fiscal deficit and to meet this government is compelled to borrow from domestic sources, they added.
The State Bank of Pakistan (SBP) on Thursday revealed that the country's overall stocks of domestic debts and liabilities, comprising permanent debts, floating debts, un-funded debts and foreign currency loans, are continuously increasing during the current fiscal year. The domestic debts and liabilities have registered a growth of 13.14 percent during first half (July-Dec) of the current fiscal year (FY12). The stock of domestic debts and liabilities have gone up by Rs 819.4 billion to new high of Rs 7.05 trillion as on December 31, 2011 as compared to Rs 6.23 trillion as on June 30, 2011.
Detail analysts revealed that the increase has been totally in domestic debts, while domestic liabilities have posted some decline. With a fall of 14 percent or Rs 29.8 billion, the total government's domestic liabilities have declined to Rs 184.4 billion in December from Rs 214.2 billion in June 2011. Similarly, the country's cumulative stocks of domestic debts have posted an increase of 14 percent or Rs 849.3 billion to Rs 6.866 trillion at the end of first half of current fiscal year, which previously was Rs 6.017 trillion at the end of last fiscal year.
Category wise analysts revealed that the tremendous rise in debts' stock has been driven by the healthy growth in the floating debts, which has gone up by 13 percent during the period under review. Overall floating debts reached Rs 3.667 trillion mark in December 2011 compared with Rs 3.235 trillion in June 2011, depicting an increase of some Rs 342.4 billion during the first half of FY12. The floating debts includes three months' treasury bills, market treasury bills and MTBs for replenishment of cash.
In addition, permanent debts, which include market loan, federal government bonds, income tax bonds, prize bonds, etc, have rose by 30 percent or Rs 338 billion during July-December of current fiscal year. With current increase it surged to Rs 1.462 trillion from Rs 1.124 trillion.
Similarly, with an increase of 9 percent or Rs 78.7 billion, un-funded debts, which comprise national saving, postal life insurance and GP fund, have reached Rs 1.734 trillion at the end of first half. Earlier it was Rs 1.655 trillion at the end of last fiscal year. Debts under foreign currency loan remained at Rs 1.4 billion.