The federal government borrowing for budgetary support from scheduled banks posted an increase of Rs 192 billion during the current fiscal year owing to rising current expenditure, higher subsidies and slow foreign inflows. The State Bank of Pakistan on Tuesday revealed that federal government borrowed Rs 861.273 billion during July 1, 2012 to April 12, 2013, for budgetary support from scheduled banks compared with borrowing of Rs 668.773 billion in corresponding period of last fiscal year, depicting a healthy growth of 29 percent or Rs 192.500 billion.
"Shortfall in foreign inflows on the back of slow privatisation process, rising government expenditure and billions of rupees subsidies on commodities had compelled the federal government to go for it," economists said. "Less than target revenue collection and losses of Public Sector Enterprises (PSEs) are also chief reasons of high government borrowing," they added. When the country is facing shortfall in revenue and witnessing slow foreign inflows, there is only one solution and that is borrow from domestic resources, they added.
However, the government borrowing from the State Bank has witnessed a massive decline of 70 percent to Rs 97.687 billion during the current fiscal year down from Rs 328.876 billion in the same period of last fiscal year. Cumulatively, the federal governments has borrowed some Rs 952 from banking system (including SBP and scheduled banks) during July 1, 2012 to April 12, 2013 compared to Rs 1 trillion in the corresponding period of last fiscal year, depicting a decline of 5.5 percent.