ISLAMABAD, July 20: Pakistan’s total outstanding domestic debt has crossed Rs1.787 trillion mark on May 31, 2003, up by about Rs70 billion, from Rs1.718 trillion in June 2002.
The rise in debt has taken place despite reduced interest rates and government’s claims that “accumulation of domestic debt has been brought to a stop” through fiscal discipline.
The latest data of the State Bank of Pakistan reveals that the total domestic debt by end of June 2001 had stood at Rs1.730 trillion but declined to Rs1.718 trillion in 2002.
A comparison of the three-year debt data indicates that permanent debt is increasing at a steady pace. It was slightly over Rs281 billion at the end of June 2001, but jumped to Rs368 billion in June 2002. It further rose to Rs395 billion on May 31, 2003.
The permanent domestic debt comprised medium and long term market loan, federal government loans, special government loans, federal instruments and prize bonds.
The floating domestic debt, mainly comprising short term treasury bills, is maintaining a declining trend. The floating domestic debt was recorded at Rs738 billion at the end of June 2001 but reduced to Rs558 billion by the end of June 2002 and further dropped to Rs508 billion on May 31, 2003.
The central bank figures suggest that unfunded domestic debt, comprising almost all deposits of the national saving schemes, continued to rise during the last three years.
The unfunded domestic debt stood at slightly over Rs712 billion on June 30, 2001. It increased to more than Rs792 billion a year later and went up further to Rs884 billion on May 31, 2003.
The figures further suggest that while defence savings have been on the rise from Rs265 billion in 2001 to Rs287 billion in 2002 and further to Rs306 billion in May 2003, the borrowing from National Defence Saving Schemes has been declining from Rs41 million in 2001 to Rs35 million in 2002 and further to Rs30 million in 2003.
The domestic debt raised through Special Saving Scheme has witnessed a significant increase during the last three years. It amounted to Rs173 billion in June 2001, and increased to Rs209 billion in June 2002 and touched Rs277 billion in May 2003.
The debt raised through regular income scheme and GP fund has remained almost static during the period.
The regular income scheme stood at Rs179 billion in 2001 and increased to Rs190 billion in 2002 but dropped again to Rs176 billion in May 2003.
Similarly, GP fund collection amounted to Rs18.5 billion, Rs18.7 billion and Rs18.4 billion in 2001, 2002, and 2003, respectively.
The government has been saying all along that rising debt stock has serious implications for debt service obligations.
The domestic debt servicing in Pakistan consumed more than 66 per cent of total revenue, leaving very little fiscal space for development spending, social sector and physical infrastructure spending.
Domestic debt in Pakistan is categorized into permanent debt which is both medium and long-term, floating debt which is normally short-term and the unfunded debt which comprised almost all deposits of the National Saving Scheme. The domestic debt servicing cost is far higher than that of the foreign debt.
