The country''s domestic debt stocks have crossed Rs 4 trillion mark for the first time in the history due to the significant rise in fiscal deficit and slow foreign inflows. The central bank has revealed that the country''s overall domestic debts comprising permanent debt, floating debt and un-funded debt stocks have registered a healthy growth of some 14 percent during the July-February of current fiscal year.
In absolute terms domestic debts have shot up by Rs 521.6 billion to a new peak of Rs 4.374 trillion during the first eight months of the current fiscal year as compared to Rs 3.852 trillion as of June 30, 2009. However, rise in domestic debt during the first eight months of current fiscal year depicted a decrease of some 11 percent or Rs 64.9 billion, when compared with same period of last fiscal year, in which domestic debt posted a rise of Rs 586.5 billion.
This tremendous increase in debt stocks has been driven by high increase in the floating debt category, which gone up by 16 percent during July-February of current fiscal year. The floating debt includes three months Treasury Bills, Market Treasury Bills and MTBs for Replenishment.
Crossing the level of Rs 2 trillion, overall floating debts have reached Rs 2.213 trillion in February 2010 against Rs 1.904 trillion in June 2009, depicting an increase of some Rs 309.3 billion during the first eight months of current fiscal year.
Permanent debts, which includes market loan, federal government bond, income tax bond, etc, have gone up by 12 percent or Rs 78.3 billion to Rs 756.3 billion by end of February 2010 as compared to Rs 678 billion in June 2009. With an increase of Rs 125.8 billion or 10 percent, un-funded debt, based on the national saving has mounted to Rs 1.396 trillion during the first eight months of current fiscal year. It earlier stood at Rs 1.27 trillion at end of FY09.
Economists said higher fiscal deficit, low privatisation proceeds and slow foreign inflows have pushed the domestic outstanding during the current fiscal year. They said that presently the government is also increasing its borrowing from the saving schemes to meet its rising expenditures and in the future lending from saving schemes is likely to surge further.
"Due to rising current expenditure, the government has already indicated that it would not be meeting the IMF target of fiscal deficit," they said and added that rising defence expenditures and below target revenue collection is also an important reason for high borrowing.
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