Domestic debt, liabilities swell to Rs13.41 trillion

KARACHI: Total domestic debt and liabilities of the government has swelled 12.33 percent to Rs13.41 trillion by January as compared to Rs11.94 trillion in the corresponding month of the last year, according to the statistics released by the State Bank of Pakistan (SBP) on Friday.

The total domestic debt of the government increased to Rs13.12 trillion, showing an increase of 12.2 percent from Rs11.69 trillion during the comparative months.

The rising dependency of the government for borrowing through instruments, including Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs) are major components behind the rising domestic debt.

The government borrowings through MTBs have surged by 34 percent to Rs2.707 trillion by January as compared to Rs2 trillion in the corresponding months of the last year.

Similarly, the government is also aggressively borrowing through PIBs, which showed an increase of 16.34 percent to Rs4.52 trillion as compared to 3.886 trillion.

Analysts attributed the rising government borrowing from commercial banks to net retirement to the SBP and to repay matured amount to the banking system against sold securities.

According to a report on banking system, the overall investments in government securities had increased to Rs6.33 trillion as of end of December 2015, which was 91 percent share in total investments of the banks.

The SBP in a report; however, said the government continued to borrow mainly from commercial banks and retired some of its debt to the SBP.

“With this strategy, the government not only successfully met the IMF ceiling on its borrowing from the central bank for end-September 2015, but also satisfied the zero quarterly limit, prescribed in the SBP Act, 1956.”

The analysts said that the banks were also interested to increase their exposures in risk-free government securities.

As per the latest data issued by the SBP, the permanent debt of the government has increased to Rs5.33 trillion from Rs4.7 trillion.

Under this head, all the three components, ie, market loans, federal government bonds and floating debt posted increase during the period under review.

Analysis of latest statistics revealed that the total stock of debt increased by Rs928 billion during seven months (July-January) of the current fiscal year from Rs12.55 trillion as of June 2015.

Total liabilities of the government by January increased to Rs290.5 billion from Rs244.3 billion in the same month of the last year.