KARACHI: The federal government’s total debt stocks crossed Rs 70 trillion mark at the end of August 2024 primarily due to massive borrowing to finance the fiscal deficit.

The State Bank of Pakistan (SBP) on Tuesday reported that the central government’s total debt (domestic and external) surged by 2.1 percent during the first two months (July-Aug) of this fiscal year (FY25).

Overall, the federal government’s total debt stock crossed the Rs 70 trillion mark to reach an all-time high level of Rs 70.362 trillion by the end of August 2024 compared to Rs 68.914 trillion as of June 2024, depicting an increase of Rs 1.448 trillion just in two month.

Govt debt stocks rise to Rs69.9trn

The detailed analysis revealed that during the period under review, domestic and external debt stocks witnessed upward trend, however major growth was seen in the domestic debt stocks. The central government’s borrowings from domestic resources rose to Rs 48.34 trillion in August 2024 up from Rs 47.160 trillion in June 2024, showing an increase of Rs 1.179 trillion.

The external debt in rupee terms rose by 1.2 percent or Rs 269 billion during the first two month of this fiscal year. The total stocks of external debt rose to Rs 22.023 trillion at the end of August 2024 as against Rs 21.754 trillion in June 2024. According to the SBP, US dollar, last day Weighted Average Customer Exchange Rates was Rs 278.3668 in June 2024, while it was Rs 278.5769in July 2024.

According to Topline Securities, year on year basis, Central Bank Government Debt to GDP ratio has come down to 65 percent in Aug 2024 from 73 percent in Aug 2023 mainly due to decline in external debt to GDP ratio from 27.6 percent of GDP to 20.2 percent of GDP in Aug 2024.

External Debt to GDP has declined primarily due to currency appreciation from PKR/USD of 305.61 in Aug 2023 to 278.57 in Aug 2024.

Copyright Business Recorder, 2024