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KARACHI: The central government’s domestic debt increased by Rs947 billion in the first seven months of FY18, State Bank of Pakistan reported on Tuesday.

The domestic debt rose to Rs15.796 trillion in January 2018, up 6.3 per cent, from Rs14.849tr in June 2017.

The report showed permanent debt to have declined by Rs490bn to reach Rs5038bn in the period under view, whereas all other kinds of debts showed a rise.

The main decrease under the permanent debt was in Pakistan Investment Bonds (PIBs) which fell to Rs3,851bn in January from Rs4,392bn in June.

The government has reduced the stocks of PIBs due to its higher yield (in double digits) that is incurred at the time of sale. Currently it issues less than Rs300bn in three month period and much lesser in the maturity amount.

The latest auction target for March-May 2017-18 stood at Rs250bn while the maturity amount was Rs610bn.

The additional amount to pay back the maturity amount of PIBs is raised through auction of market treasury bills.

The floating debt which included t-bills jumped by Rs1,393bn to reach Rs7,944bn in the said period. The government has been trying to replace the high-yield PIBs with short term treasury bills. The stock of t-bills rose to Rs4,315bn in January, reflecting an increase of Rs233bn.

The unfunded debt which incorporates National Saving Schemes rose by Rs44bn to Rs2,809bn. However, the government’s domestic liabilities declined by Rs13bn to stand Rs444bn in the same period.

Published in Dawn, March 14th, 2018