Mid-year review: 77pc borrowing for financing fiscal deficit thru domestic sources: MoF

ISLAMABAD: The government has borrowed around 77 percent for financing of federal fiscal deficit through domestic sources, according to the Finance Ministry.

The mid-year review report of fiscal year 2023-24 of Finance Ministry said that the report gives a mid-year comparison of the budgeted and actual revenues, expenditures and financing undertaken in the first half of the fiscal year 2023-24.

In the first half of the outgoing fiscal year, interest expense stood at around Rs4.2 trillion, of which 88 per cent was interest on domestic debt.

9MFY24: Fiscal deficit recorded at Rs3.902trn

Expenditures of the federal government has increased by 58 per cent during the first half of the current fiscal year to Rs6,710 billion as against Rs4,247.7 billion for the same period of last fiscal year primarily on account of rising mark-up payments. The report noted that fiscal and other data in the report is, however, subject to reconciliation at the end of the financial year.

The composition of domestic debt as of end December 2023 is PIBs 60 per cent, T-Bills 20 per cent, Ijara Sukuk 10 per cent and NSS/Others 10 per cent. While external debt composition as of end December 2023 is multilateral 53 per cent bilateral 31 per cent, government Eurobonds nine per cent and seven per cent commercial/others.

According to mid-year review report, the NSSs flows remained subdued. The government retired short-term T Bills by around Rs1 trillion and gross issuance of fixed-rate PIBs was Rs840 billion against maturity of Rs1.2 trillion while gross issuance of floating-rate PIBs was Rs5 trillion against repayment of Rs2 trillion.

Gross issuance of government Ijara Sukuk was Rs1.3 trillion against no maturity and Rs30 billion were successfully raised from first-ever Ijara Sukuk (one-year fixed rate Ijara Sukuk) auction on PSX. Participation stood at Rs478 billion, with 90 per cent contribution from non-banking sector.

As per mid-year report, external budgetary disbursements were US$ 5.4 billion with US$ 2.2 billion from multilaterals, US$ 2.7 billion from bilaterals, and US$ 0.5 billion from Naya Pakistan Certificates. And external budgetary repayments were US$ 3.3 billion.

Additionally, US$1 billion China SAFE deposit and US$ 3 billion Saudi Arabia deposits were rolled over for one year in July and December 2023 respectively, besides US$ 1.2 billion was received under the IMF Stand-by Arrangement and US$ 1 billion as UAE deposit for balance of payments support.

Copyright Business Recorder, 2024