The rising fiscal deficit and shortfall in tax revenue resulted in over Rs one trillion expansion in domestic debt during the current fiscal year. Economists said that higher fiscal deficit, shortfall in tax revenue collection and unplanned subsidies are responsible for rising domestic debt stocks. "The government''s spending on account of security, subsidies and current expenditure witnessed massive surge during the current fiscal year, while revenue growth is less than target," they added.
According to State Bank of Pakistan (SBP) the country''s overall stocks of domestic debt comprising permanent debt, floating debt, unfunded debt and foreign currency loan continue to rise during the current fiscal year. The domestic debts registered a massive surge of 15 percent during first nine months (July-March) of current fiscal year (FY13).
The stock of domestic debts reached Rs 8.8 trillion mark as on March 31, 2013 as compared to Rs 7.63 trillion as on June 30, 2012, depicting an increase of Rs 1.17 trillion.
Detailed analysis indicated that domestic debt stocks continued to grow, while domestic liabilities posted some decline. With a decline of 51 percent or Rs 125 billion, the total government domestic liabilities declined to Rs 117 billion in March 2013 down from Rs 242 billion in June 2012.
Similarly, the country''s cumulative stocks of domestic debt and liabilities posted an increase of 13 percent or Rs 1.037 trillion during the first nine months of FY13. Overall stock of domestic debt and liabilities stocks surged to Rs 8.917 trillion as on March 31, 2013. Previously it stood at Rs 7.88 trillion at end of last fiscal year.
Economists said during this fiscal year the country received an amount of $1.8 billion from the US on account of Coalition Support Fund (CSF) and these inflows provided some cushion to the government to reduce its reliance on domestic debt resources. However, despite this the government borrowing from domestic banking channel is gradually increasing.
Floating debt, which includes three months'' treasury bills and market treasury bills, is key borrowing instrument for government to meet its financial needs and over 50 percent of domestic debt has been borrowed through this instrument, they said.
"We are expecting some more growth in the domestic and the overall stocks of domestic debt and liabilities are likely to reach Rs 9 trillion mark at end of current fiscal year," they added.
Category-wise analysis revealed that tremendous rise in debt stocks has been driven by the healthy growth in the floating debts, which rose by 15 percent during the period under review. Overall floating debts reached Rs 4.776 trillion mark at end of March 2013 compared to Rs 4.143 trillion in June 2012, depicting an increase of some Rs 633.2 billion.
In addition, permanent debts, which include market loan, federal government bonds, income tax bonds, prize bonds, etc, rose by 15 percent or Rs 260.6 billion during July-March of current fiscal year. With current increase it surged to Rs 1.956 trillion from Rs 1.696 trillion.
Similarly, with an increase of Rs 265 billion, unfunded debts, which comprise national saving, postal life insurance and GP Fund reached Rs 2.063 trillion at end of third quarter.
Debts under foreign currency loan posted an increase of Rs 3.1 billion to Rs 4.5 billion. It included FEBCs, FCBCs, DBCs, and special US bond held by the residents. Previously these were part of external debt liabilities but from June 2008 onwards it is the part of domestic debt.
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