KARACHI: Despite higher taxation on almost all sectors of the economy, the government has rigorously been borrowing for budgetary support since the outset of the current fiscal year.
The data released by the State Bank of Pakistan (SBP) on Monday showed that the government borrowed Rs1,600 billion in the first 70 days (July 1 to Sept 8) of this fiscal year against Rs261bn in the same period last year.
In other words, the government borrowed over Rs22.8bn per day to meet its expenditures.
The rapid increase in borrowing speaks a lot about the widening gap between revenue generation and rising spending. It seems the government is facing a serious shortage of revenue or the spending is much higher than the budgeted target.
However, the revenue collection during the first two months of the current fiscal exceeded the target set for the period.
The Federal Board of Revenue collected Rs1,207bn during July-August against the target of Rs1,183bn, an increase of Rs24bn.
The budgetary borrowing totalled Rs3,744bn in the entire FY23 against Rs3,133bn in FY22.
The higher government borrowing reflects the growing need for spending amid unprecedented inflation. Research reports of the analysts of brokerage houses show that inflation for September would touch the 30pc mark.
The increased prices of petroleum products and energy have accelerated the prices all around the economy. While the common people are suffering heavily, the business community is facing a serious threat and struggling for their survival.
The cost of production has gone up too high as traders and industrialists are unable to borrow expensive money while record inflation is also pushing up the cost of inputs.
Published in Dawn, September 26th, 2023