The burden of debts from local banks and financial institutions continues to grow at an alarming rate. It has already crossed the Rs. 16 trillion mark, reaching an all-time high by the end of January 2018.
According to the statistics updated by State Bank of Pakistan (SBP), the overall domestic debts of the government have reached Rs. 16.24 trillion by January 2018.
In 2017, the borrowing of the federal government touched a record level of Rs. 16.21 trillion by the end of November 2017. Though the government repaid its loans, mainly borrowed from commercial banks.
In 2017, the federal government made a borrowing of Rs. 1.34 trillion from the domestic market, mainly banks and the financial sector, which increased the overall debt burden to Rs. 15.889 trillion by the end of the year.
The excessive borrowing was carried out to meet expenditures of the federal budget, which was higher than the earnings received from revenues of taxes and non-taxes (such as levies, license fees and privatization receipts).
During the period, the government relied on Market Treasure Bills (MTBs) to raise more than Rs. 4.23 trillion. Nearly Rs. 3.85 trillion was borrowed through Pakistan Investment Bond and Rs. 385 billion through Ijara Sukuk.
The gap between expenses and revenue streams is on the rise showing the inefficiency and poor management of the government machinery.
Besides domestic debts, the government borrowed billions of Dollars from external sources, including foreign banks and multilateral borrowing agencies, leading to a huge burden on the economic health of the country.
The government should not only increase the revenue generation through taxes but through non-taxes sources as well in order to meet its realistic expenses. Besides, the expenditures of the federal and provincial governments should be effectively used for the public instead of being wasted and political promotional campaigns and luxurious lifestyles.