KARACHI: The government has borrowed Rs113 billion for budgetary support within just one week, according to latest data released by the State Bank of Pakistan (SBP).

Borrowing for budgetary support has seen manifold increase during the first half of fiscal year as almost all other revenue streams have fallen short of targets. During July 31 to Jan 4, the government’s budgetary borrowing increased to Rs835.7bn compared to Rs353.4bn during the same period last year; translating into a 136 per cent jump.

According to data released by central bank, during the week ending Dec 28, 2018 total borrowing for the fiscal year stood at Rs722bn, however, as of Jan 4, the total amount rose to Rs835.7bn — Rs113bn increase in just one week.

The government is largely dependent on the SBP for its borrowing which has gone up to Rs3.65 trillion during the period under review.

On the other hand, the incumbent government is unwilling to borrow sums from scheduled banks contrary to last fiscal year’s trend when net retirement of debt was Rs138bn compared to Rs2.61tr till Jan 4 during the ongoing fiscal year.

The government is left with no option but to borrow from the central bank as almost all revenue departments failed to meet the revenue targets. Moreover, the government is expected to announce third budget in the ongoing fiscal year in order to increase its revenue.

The finance minister, Asad Umar will present the mini-budget on Jan 23 in the parliament. He said that the mini-budget would help generate more revenue for the government without revealing any specifics.

If the government continues to borrow at current pace, the amount would breach the cap of 5.1pc set for the budget deficit in the ongoing fiscal year. The government is currently negotiating with the International Monetary Fund (IMF) for a bailout, however, the jump in borrowing is likely to irk IMF authorities.

Despite support from Saudi Arabia and assurances from UAE and China, the government will still continue to engage with donors for a deal in order to contain the balance of payment crisis.

Published in Dawn, January 15th, 2019