Federal Govt’s Debt Reaches All-Time High in First 5 Months of FY22

The federal government’s debt swelled to an all-time high of Rs 40.99 trillion during the first five months of the current fiscal year, mainly due to the depreciation of the local currency and the State Bank of Pakistan’s loan to the government against the allocation of SDRs.

Data released by the State Bank of Pakistan (SBP) showed that the total Central Government Debt touched Rs. 40.973 trillion at end of November 2021 as compared to Rs. 38.699 trillion in June 2021. The federal government’s debt had surged by Rs. 2.27 trillion during the period.

The rupee’s depreciation against the dollar was the main contributor to the escalation of the government’s financial obligation as the rupee fell by Rs. 21 against the dollar, from Rs. 157 to Rs. 176 during the five months. The external debt swelled by Rs. 1.71 trillion from Rs. 12.433 trillion to Rs. 14.146 trillion during the period under review.

The Central Government Domestic debt did not grow with the speed of the external debt as it increased by Rs. 561 billion from Rs. 26.265 trillion to Rs. 26.827 trillion during the first five months of the current fiscal year.

The data shows that the PTI government is depending more on long-term debt instead of short term debt to meet its financial obligations. The long-term loan was appreciated by Rs. 1436 billion from Rs. 19.557 trillion to Rs. 20.993 trillion during the five months.

The government’s permanent debt increased by Rs. 1461 billion from Rs. 15.904 trillion to Rs. 17.365 trillion during the five months of the current fiscal year. Out of the total permanent debt obligations, the debt was increased by Rs. 1055 billion from Rs. 15.457 trillion to Rs. 16.512 trillion against the federal Government Bonds, including Pakistan Investment Bonds, Government of Pakistan Ijara Sukuk three-year bonds, and Bai-muajjal of Sukuk.

The government’s financial obligations decreased by Rs. 67 billion from Rs. 443 billion to Rs. 376 billion against the Prize Bonds during the five months. These obligations were recorded at Rs. 761 billion in November 2020. The State Bank of Pakistan’s loan to the Government of Pakistan against the SDRs allocations was recorded to Rs. 474 billion, which was zero last month.

The unfunded debt, including saving schemes, postal life insurance, and a DP fund, has been narrowed by Rs. 26 billion from Rs. 3.646 trillion to Rs. 3.62 trillion during the current fiscal year. The short-term debt from local resources has depreciated by Rs. 887 billion from Rs. 6.680 trillion to Rs. 5.793 trillion during the five months of the current fiscal year.

The Market Treasury Bills of the total short-term loan decreased from Rs. 6.676 trillion to Rs. 5.79 trillion during the above-mentioned period. The government’s financial obligations also increased by Rs. 12.5 billion to Rs. 40.7 billion from Rs. 28.2 billion against the scheme of the Naya Pakistan Certificate.