KARACHI: The country's total stocks of domestic debt and liabilities crossed Rs 5 trillion mark for the first time due to significant rise in fiscal deficit and slow foreign inflows.
The State Bank of Pakistan (SBP) said on Saturday that the country's overall stocks of domestic debts and liabilities, comprising permanent debt, floating debt, un-funded debt and foreign currency loan, had registered a growth of 6 percent during the first quarter (July-Sep) of current fiscal year 2010-11.
The stock of domestic debts shot up by Rs 298.5 billion to new peak of Rs 5.191 trillion on Sep 30, 2010 as compared to Rs 4.893 trillion as on June 30, 2010.
The rise in domestic debt stocks was also 93 percent or Rs 144 billion higher in July-Sep of fiscal year 2010-11, when compared with same period of fiscal year 2009-10.
During the first quarter of last current fiscal year stocks of domestic debt and liabilities had surged by Rs 154.1 billion as compared to Rs 298.5 billion in some period of current fiscal year.
Economists say that higher fiscal deficit, slow privatisation process and slow foreign inflows have largely contributed in expansion of domestic outstanding during the current fiscal year.
They said that at present 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 more. To attract more investment under this head the federal government in December 2010 announce a healthy increase in rates of national saving schemes.
"Due to rising current expenditure, the government has already indicated that it would fail to meet the IMF target of fiscal deficit," they said and added that rising defence expanses and less than target revenue collocation is also an important reason of high borrowing.
During the period cumulatively domestic debt has gone up by Rs 309.5 to Rs 4.958 billion, while with a decease of Rs 7.6 billion government's domestic liabilities have declined to Rs 7.6 billion.
This tremendous rise in debt stock has been driven by the healthy growth in the floating debt category, which has gone up by 11.41 percent during July-Sep 2010. The floating debt includes three months' treasury bills, market treasury bills and MTBs for replenishment of cash.
Overall floating debts reached Rs 2.673 trillion in Sep 2010 as against Rs 2.399 trillion in June 2010, depicting an increase of some Rs 273.9 billion during the first quarter of current fiscal year.
In addition, permanent debts, which include market loan, federal government bonds, income tax bonds, prize bonds, etc, declined by Rs 3 billion to Rs 791.3 billion at end of first quarter as compared to Rs 794.3 billion stood in June 2010.
Similarly, with an increase of 2.4 percent or Rs 35.3 billion, unfunded debt, based on national saving, postal life insurance and GP fund, mounted to Rs 1.491 trillion in Sep 2010. Earlier it stood at Rs 1.456 trillion at end of last fiscal year 2010.
Debt under foreign currency loan posted a slight decline of Rs 0.1 billion to Rs 3 billion from Rs 3.1 billion.
The central bank has expressed serious concern over the rising government budgetary borrowing from it and has adopted a tight monetary policy to curb the increasing inflation. However, despite that, the government's budgetary borrowing is uncontrolled, and IMF has stopped tranches under Stand By Arrangement (SBA).
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