Jul-Mar period: Govt borrowing soars to record high of Rs4.8trn

KARACHI: The federal government’s budgetary borrowing from scheduled banks rose to a record high level of Rs 4.8 trillion during the first nine months of this fiscal year (FY24).

According to State Bank of Pakistan (SBP), federal government borrowing for budgetary support has recorded an increase of 138 percent or Rs 2.809 trillion during this fiscal year to finance the fiscal deficit. Overall, the federal government raised Rs 4.842 trillion from the scheduled banks during July-March of FY24 compared to Rs 2.033 trillion in the same period of last fiscal year (FY23).

Analysts said that the federal government’s rising spending requirement has forced it to borrow money from scheduled banks to meet its financial requirement. As the federal government has availed the IMF SBA program, the government is committed to restrict its borrowing from the SBP.

MTBs auction: govt borrowing well above target

The detailed analysis revealed that the federal government instead of borrowing has repaid a sufficient amount to the SBP to reduce the previous debt. The federal government has returned Rs 332.7 billion to the SBP during the first nine months of this fiscal year as against the borrowing of Rs 828.6 billion in the corresponding period of last fiscal year.

During the period under review, statistics showed that the provincial governments’ financial health is much better than the federal government as all provinces have cumulatively repaid an amount of Rs 315.4 billion to the SBP.

Balochistan government returned a loan of Rs 68.7 billion to SBP, Khyber Pakhtunkhwa Rs 40.5 billion, Sindh government repaid Rs 41.8 billion and the Punjab government made a repayment of Rs 164.22 billion to the SBP during July-March of FY24.

In addition, the AJK Government and Gilgit-Baltistan Government retired Rs 17.7 billion and Rs 1.1 billion during the period under review.

The federal government for the past two years is facing a serious crisis and rising fiscal deficit has compelled the federal government to borrow more from the domestic banking system.

In addition, the federal government has planned to borrow some Rs 5 trillion in the last quarter (April-June) of FY24 from banks through the sale of treasury bills and bonds in the last quarter of this fiscal year to finance its budget deficit.

The federal government will borrow this amount through the auction of security papers including Pakistan Investment Bonds (PIBs) and Government of Pakistan Market Treasury Bills (MTBs). The government has plans to raise Rs 2.49 trillion from commercial banks through long-term security paper and Rs 2.475 trillion through the auctions of MTBs.

Copyright Business Recorder, 2024