KARACHI: Provisional data released by the State Bank of Pakistan (SBP) on Monday showed total central government debt rising by Rs3.4189 trillion in the period ending August 2020 compared to the same period last year.

But since June the increase is more nominal, coming in at Rs553.6 billion, which suggests that the rapid pace of debt accumulation of the previous year has found a plateau. Most of the increase since June is accounted for by a surge of money flowing into longer term Pakistan Investment Bonds (PIBs).

Domestic debt and liabilities of the central government rose by Rs2.086tr in the period ending August 2020 compared to the same month last year. In August total debt and liabilities came in at Rs24.0999tr.

From the period ending in June of 2020, the total debt and liabilities rose by Rs226.4bn.

Increase since June is Rs553.6bn

Total external debt of the government rose by Rs1.3783tr from August last year, but since June of this year it has registered an increase of Rs298.8bn only. The external debt does not reflect IMF lending for balance of payments support, but does include the IMF money lent for budgetary support.

The biggest increase came in federal government bonds which rose by Rs2.0675tr, drive almost entirely by a surge in PIBs that rose by Rs1.8299tr. Since June PIBs have seen an additional Rs505.3bn investments, making them the single largest driver of the changes in the debt numbers.

Floating debt fell by Rs497.5 billion and unfunded debt rose by Rs487.3bn.

Overall domestic debt of the government rose by Rs2.04 trillion. Much of the movement appears to be driven by the reprofiling of debt structure towards more long term instruments such as PIBs. Short term instruments such as Market Treasury Bills showed nominal increase of Rs71.5bn.

Published in Dawn, October 13th, 2020