Govt debt surges by 11pc to Rs36.53tr

Published March 6, 2021
According to SBP data, long-term domestic debt increased by Rs2.62tr in a year. — AP/File
According to SBP data, long-term domestic debt increased by Rs2.62tr in a year. — AP/File

ISLAMABAD: The federal government’s total debt increased to Rs36.537 trillion by end-January as against Rs32.997tr in the same period last year, up by almost 11 per cent, or Rs3.54tr.

Latest data released by the State Bank of Pakistan on Friday showed the central government’s domestic debt also increased to Rs24.502tr at the end of first seven months of 2020-21 when compared to Rs21.794tr, an increase of 12.4pc, or Rs2.71tr.

Central government external debt at the end of January has been reported at Rs12.035tr against Rs11.202.7tr of the comparable period last year, showing an increase of Rs832bn or 7.42pc.

Despite the overall incre­ase in debt situation, the SBP data, however, showed that major increase was reported in the long-term domestic debt, up by about 15.63pc to Rs19.367tr against Rs16.748tr by end-January last year. In absolute terms, the long-term debt increased by Rs2.62tr in a year.

On the other hand, the short-term domestic debt increased by only Rs89bn to Rs5.136tr at end-January this year as against Rs5.047tr last year, up by 1.76pc. This apparently was part of the government strategy to prolong the profile of the debt to stagger debt servicing obligations.

The SBP data also put the total domestic permanent debt at Rs15.692tr, showing a massive increase of 17.83pc, or Rs2.375tr, in a single year from Rs13.317tr reported at the end of January 2020.

This included a major portion of about Rs15tr worth of federal government bonds by end of first seven months of current fiscal year against Rs12.581tr reported at the end of first seven months of last year. Even out of this, the major chunk of Rs14.16tr pertained to Pakistan Investment Bonds as against Rs12.33tr of same period last year. The long-term PIBs are not only preferred by domestic but also by foreign investors as these bonds offer higher returns.

On the other hand, domestic debt on account of prize bonds declined by 6.5pc to Rs686bn this year as against Rs734bn at the end of first seven months of last fiscal year.

Total unfunded debt amounted to Rs3.668tr by end of January this year when compared to Rs3.424tr of same period last year.

The government relies heavily on the markets for borrowing to meet fiscal deficit after its agreement with the International Monetary Fund that restricts borrowing from the central bank for deficit financing.

Published in Dawn, March 6th, 2021

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Smog hazard
Updated 05 Nov, 2024

Smog hazard

The catastrophe unfolding in Lahore is a product of authorities’ repeated failure to recognise environmental impact of rapid urbanisation.
Monetary policy
05 Nov, 2024

Monetary policy

IN an aggressive move, the State Bank on Monday reduced its key policy rate by a hefty 250bps to 15pc. This is the...
Cultural power
05 Nov, 2024

Cultural power

AS vital modes of communication, art and culture have the power to overcome social and international barriers....
Disregarding CCI
Updated 04 Nov, 2024

Disregarding CCI

The failure to regularly convene CCI meetings means that the process of democratic decision-making is falling apart.
Defeating TB
04 Nov, 2024

Defeating TB

CONSIDERING the fact that Pakistan has the fifth highest burden of tuberculosis in the world as per the World Health...
Ceasefire charade
Updated 04 Nov, 2024

Ceasefire charade

The US talks of peace, while simultaneously arming and funding their Israeli allies, are doomed to fail, and are little more than a charade.