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Govt’s outstanding debt soared 31pc in FY19

Updated August 10, 2019

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KARACHI: The federal government’s total debt stood at Rs31.784 trillion as of June FY19 end, jumping by 31.27 per cent, from Rs24.212tr in same period last fiscal year, the State Bank of Pakistan reported on Friday.

Domestic debt was the primary driver behind this increase as it accounted for 65pc of the overall government borrowing. It grew by 26.27pc to Rs20.729tr by end of June, as against Rs16.416tr during the same month in 2018.

Long-term borrowing more than doubled to Rs15.229tr during the period under review, from just Rs7.527tr a year ago. The main contributor under this head was Pakistan Investment Bonds which surged from Rs3.413tr to Rs10.933tr.

As per the latest data, the government also had an outstanding debt of Rs3.142tr through Saving Schemes on June 30, higher by 9.5pc over last year’s stock of Rs2.868tr.

On the other hand, short-term debt witnessed a noticeable decline of 38.11pc to Rs5.5tr, from Rs8.889tr, as Market Treasury Bills for replenishment of cash fell to just Rs571 billion during the period under review, from Rs3.594tr the year before.

The government’s external debt also showed an upward trajectory as it rose by 41.81pc to Rs11.055tr as of June FY19 end, up from last year’s level of Rs7,796tr. Almost all of the outstanding borrowing under this head was long-term, making up around 99pc of the overall external debt.

Meanwhile, another document published by the SBP reveals that the government retired Rs259.32bn in the first month of this fiscal year (from July 1 to Aug 3), which was over 12 times higher than the Rs20.30bn paid back during the same period of FY18.

Bulk of this retirement was to the SBP, making up around 88.57pc of the total, which amounted to Rs229.285bn during the period. This is in stark contrast to last year when in the corresponding month, the government paid back a massive Rs1.387tr to the central bank while at the same time borrowing Rs1.367tr from scheduled banks. This time around, no such borriwng has been made; in fact, the government has also retired Rs29.585bn of commercial banks.

Over Rs61bn of debt from the provincial governments was also retired in the outgoing month, up from Rs37.08bn in same period last year.

The total government borrowing from SBP during FY19 stood at Rs2.204tr, increasing by 98.43pc over Rs1.11tr the previous fiscal year.

Published in Dawn, August 10th, 2019