KARACHI, March 13: The caretaker government has set a new record of borrowing which has pushed inflation to a record high, ruining all the efforts made by the previous government for economic improvement.

How caretakers borrowed recklessly from the State Bank of Pakistan was obvious from the figures which showed that each month they borrowed Rs58 billion or Rs2 billion per day. The ‘careless’ borrowing piled up the debt which went beyond accumulated stocks of borrowings made by the previous government in several years.

In the first four months of the current fiscal, Rs126 billion were borrowed from the State Bank while the caretaker government which took charge by mid-November took the debt amount to Rs359 billion at the end of February. The caretakers borrowed Rs233 billion.

The government’s previous stock of borrowed money from the State Bank till June 2007 was Rs345 billion. Within eight months, the government borrowing surpassed the entire accumulated stocks of debt. More borrowing will keep on setting new records with each borrowing.

The spending trend of the caretaker government was not checked by those who constituted the team to run the affairs of 160 million people living under huge burden of both foreign as well as domestic debts.

Another shock was the inflicting announcement of the caretakers who slashed the public sector development fund by Rs70 billion while more is expected.

The six-month revenue collections showed that the revenue increased during the period to Rs435 billion compared to Rs410 billion in the corresponding period of last year.

The higher revenue collection does not justify the extraordinary borrowing while slashing the PSDP looks entirely surprising, effecting the reckless spending made by the government.

This huge borrowing directly made an impact on the core inflation which rose to another peak of 8.1 per cent. It was just six per cent when the new fiscal 2007-08 started.

The rise of core inflation means that the State Bank’s monitory policy is no more effective. It also shows that non-food and non-energy goods’ prices have escaped the arresting measures taken by the State Bank.

The SBP has been urging an end to massive borrowing and said the borrowing foils efforts to control inflation.

Both food and non-food inflation has risen to a very high level, making it a threat for economic growth as cost of production has gone up.

Analysts said this high inflation does not carry the impact of recently increased petroleum prices in the country.

They maintained if oil prices which touched record $111 per barrel in the international market on Thursday, is passed on to retail level, the inflation would breach all records, making life more difficult in the country.

“There should be some check on caretakers who borrowed so aggressively, and accountability is required to know the spending they made during their allocated time period,” said Aamir Hussain, an analyst.