Pakistan''s total outstanding domestic debt rose from Rs 2.133 trillion at end June 2005 to Rs 2.233 trillion at end of April 2006, showing an increase of Rs 100.29 billion (4.70 percent), according to provisional data issued by the State Bank of Pakistan (SBP) on Wednesday.
However, compared to March 2006, when the total debt amounted to Rs 2.249 trillion, it declined by about Rs 16 billion to Rs 2.233 trillion in April, indicating that the government had retired some domestic debt, or it was the effect of withdrawal from some saving schemes which remained unattractive due to low rates of profits.
The increase in the domestic debt during the ten months of FY06 was mostly from rise in the stocks of floating and unfunded debt. The permanent debt declined rapidly during the period under review.
During these ten months, the floating debt increased by Rs 114.74 billion, and unfunded debt by Rs 5.24 billion, whereas the permanent debt declined by Rs 19.68 billion.
The permanent domestic debt, comprising medium and long-term market loans, federal government loans, special government loans, federal instruments and prize bonds, stands at Rs 481.2 billion, which was Rs 500.87 billion at the end of FY05.
The floating domestic debt, mainly comprising short-term debt instruments and market treasury bills, maintaining a rising trend, was recorded at Rs 778.16 billion at the end of June 2005. And, during the following ten months, it went up to Rs 892.90 billion.
The data further shows that the unfunded domestic debt comprising National Saving Schemes (NSS) stood at Rs 859.28 billion. It grew by Rs 5.24 billion from Rs 854.04 billion at the end June 2005.
However, it shows that the net mobilisation under all instruments of the NSS were once again negative during this period, except relatively new instruments ie Bahbood Saving Certificates, Postal Life Insurance and Pension Benefit Accounts and Mahana Amdani accounts, which increased.
Net investment in NSS fell primarily because their rates of return had become too low for investors to make fresh investment as a result of gradual slashing of profit during the last few years.
But, it is expected that as a result of government decision (in June 2006) of increasing profit rates on these instruments would attract depositors. Of these three most popular instruments of the NSS ie 10-year Defence Saving Certificates (DSCs), five-year Regular Income Certificates (RICs) and three-year Special Saving Certificates (SSCs), net withdrawals were Rs 67.72 billion in ten month of the fiscal year.
It also shows that the erstwhile popular instruments-DSCs, SSCs, and RICs-were less attractive for investors during the period under review. Besides, withdrawals from savings accounts, special savings accounts and general provident (GP) fund during the period under study were Rs 3.0 billion, Rs 983.1 million and Rs 309 million respectively during the period.
The SBP data shows that Bahbood Saving Certificates, Pensioners Benefit Accounts and Postal Life Insurance attracted net fresh investment of Rs 54.25 billion, Rs 15.05 billion and Rs 7.94 billion, respectively.