KARACHI: The government loaded another Rs401 billion on account of borrowing from scheduled banks during the three months through September, according to the State Bank of Pakistan (SBP).

Along with fast growth of foreign debt, domestic debt also sharply increased in the last two fiscal years, jumping by Rs2.804 trillion to reach Rs12.618tr by the end of June 2015.

The resultant abnormal increase in domestic debt servicing compels the government to borrow more and build up more debt.

According to a State Bank report, scheduled banks have been lending the government with much higher pace compared to last fiscal year, which witnessed record borrowing of Rs1.413tr.

Another SBP report issued on Friday showed that the banks were facing almost the same size of liquidity gap. The central bank injected Rs1.347tr in the banking system through open market operations.

The banks are provided with liquidity which enables them to invest in government papers. On Oct 7, the government borrowed almost 100 per cent more than the target set for the auction of PIBs.

Published in Dawn, October 10th , 2015

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