Lahore
\nThe borrowing policy over the last decade has brought the country to the brink, as the debt servicing has now become the biggest challenge on expenditures front in the wake of huge domestic and foreign borrowings, as the total debt stocks increased by Rs 1.641 trillion during the first four months of this fiscal year (FY24).
\nThe Ferozepur Road Industrial Association Senior Vice Chairman Shehbaz Aslam, while quoting the data of the SBP, observed that the central government\u2019s total domestic and external debt stocks rose by 2.7 percent during Jul-Oct of this fiscal year. With this increase, cumulatively the federal government\u2019s total debt stocks rose to Rs 62.482 trillion by the end of October 2023 compared to Rs 60.841 trillion by the end of June 2023.
\nShehbaz Aslam, who is also EC member of the PIAF, said that the government is forced to borrow from the domestic and external resources to finance the fiscal deficit as the country\u2019s tax revenue collection is insufficient to meet the expenditures. While, in absence of external financing the government is completely dependent on domestic borrowing, of which domestic debt stocks are sharply increasing.
\nMultilaterals as well as bilaterals have long been urging the government of Pakistan to reform the power sector, since decades ago when circular debt was in millions of rupees which today is a whopping 2.5 trillion rupees, to reform the tax structure that continues to rely heavily on indirect taxes whose incidence on the poor is greater than on the rich, a major contributory factor in poverty levels reaching a high of 40 percent today, to continuing the policy of steadily raising the budgeted current expenditure, thereby shrinking the available fiscal space annually and, last but not least, warning Pakistan of an impending water scarcity decades ago that went unheeded resulting in the country\u2019s current status of a water-stressed country.
\nThe detailed analysis revealed that, during the period under review, a sharp increase was witnessed in the domestic debt, which rose by 4 percent or Rs 1.599 trillion. The federal government\u2019s domestic debt surged to Rs 40.409 trillion in October 2023 up from Rs 38.810 trillion in June 2023.
\nThe federal government\u2019s domestic debt includes permanent debt Rs 28.033 trillion, unfunded debt Rs 2.881 trillion, foreign currency loan Rs 378 billion and short term loan worth Rs 8.988 trillion by end of October 2023.
\nDuring this fiscal year, the federal government\u2019s external debt increased slightly up by Rs 42 billion to Rs 22.073 trillion in October 2023 compared to Rs 22.031 trillion. This comprised Rs 22.041 trillion of long term and Rs 31.8 billion of short term loan.
\nThe exchange rate stability and Pak Rupee appreciation against the dollar has contributed to the lower surge in the external debt stocks. According to State Bank, the US dollar exchange rate was Rs 286.39905 in June 2023 as against Rs 281.5200 in October 2023.
\nShehbaz Aslam observed that country\u2019s fiscal policy over the past decade has focused primarily on macroeconomic stabilization in response to the financial crisis, calling for more emphasis on reforms to foster long-term inclusive growth by adapting to advancing technology and deepening global integration. He said that reforms will require a growth-friendly budget, re-composition to upgrade tax, social spending, and active industrial policies in close consultation with the real stakeholders to achieve sustainable development goals.
\nThe FRIA SVC said that amid increasing discount rates that have now hiked to 22 per cent, Pakistan\u2019s total debt and liabilities skyrocketed, which is rising at high speed in the wake of a soaring budget deficit.
\nShehbaz Aslam said that there was no justification for making changes in policy rate because it would further increase debt servicing requirements. The policy rate has gone up with a recent hike in the policy rate of 150 basis points and it seemed at only achieving stabilization and there was a significant increase in real positive interest rate.<\/p>\n","protected":false},"excerpt":{"rendered":"
Lahore The borrowing policy over the last decade has brought the country to the brink, as the debt servicing has now become the biggest challenge on expenditures front in the wake of huge domestic and foreign borrowings, as the total debt stocks increased by Rs 1.641 trillion during the first four months of this fiscal […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-373287","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"\n