The present government borrowed Rs 1.8 trillion during the first seven and a half months of the ongoing fiscal year as compared to Rs.245.8 billion during these months, last year. It shows the governmentÂ’s financial requirements against the IMFÂ’s requirement to minimize expenses and generate more revenues.
According to the State Bank of Pakistan report, the government could set a record by the end of this financial year if it maintains the existing pace of borrowing from the banks. There was a net retirement of debt during the first seven and a half months, but the fiscal year ‘22 ended with Rs.3.133 trillion in budgetary borrowing.
Financial experts believe that the government would borrow heavily in the last quarter of the current fiscal year to meet the expenses. The revenue collection is short of the target despite the additional taxes, increased petroleum prices and rise in 1 percent GST.
The collection of revenues during the current fiscal year has been estimated to be Rs.3.95 trillion but the present circumstances show that collecting this mount will be difficult. As per financial analysts, domestic debt servicing in the fiscal yearÂ’23 has been estimated to be Rs.3.95 trillion but with the current increase in the interest rate as announced by the SBP in its monetary policy, it would go up to Rs.5.4 trillion.
International Monetary Fund (IMF) says the primary deficit is 0.9 percent of GDP or about Rs.840 billion but the government puts it at 0.45 percent around Rs.450 billion. In the budget estimates for the current fiscal year, the primary deficit was projected to be 0.2 percent and the fiscal deficit at 4.9 percent.
Faisal Mamsa, the CEO of Tresmark said, “Pakistan’s interest to revenue ratio which was in the region (just behind Sri Lanka) at 42 percent will balloon up to 54 percent. This means interest payments will rise from Rs.4 trillion to Rs.5.4 trillion, crowding other growth and development areas. Half-hearted efforts cannot sustain and Pakistan will soon find itself spiraling deeper into the economic abyss unless the long-awaited reforms are done.”