LAHORE: The Punjab government's debt saw decline by 5 percent (Rs 42.8 billion) in the first quarter of this year. As per a report released by the Punjab Finance Ministry on December 31, 2020, the total liabilities stood at Rs 950 billion that declined to Rs 908 billion by the end of March this year. Moreover, the amount of net new debt received during the quarter under review amounts to Rs 6.7 billion.

The outstanding debt stock as on March 31 is exclusive of guarantees amount awarded to various projects/entities of the Punjab government; domestic borrowing limit awarded by National Economic Council (NEC) to Punjab is utilised to offer such guarantees. The total amount of guarantees outstanding in March was Rs 48.75 billion.

The report also pointed out that commodity financing debt stock amounting to Rs 399 billion (as on March 31) is not included in above given debt stock of Rs 908 billion. The commodity financing is raised on the security of wheat stocks and the guarantee of the federal government. The amount of wheat stock available with the Punjab government amounts to Rs 48 billion (as on March 31); repayment of this loan along with incidentals (including markup) is made from sale proceeds of the purchased wheat stock. The provincial government subsidises the gap between purchasing cost and the sale price.

"The reduction in the debt is mainly due to foreign exchange gain of Rs 49.5 billion realized between January and March this year, while the total gain of rupee appreciation realized during current fiscal year has amounted to Rs 88 billion," the report pointed out.

Copyright Business Recorder, 2021