KARACHI: Pakistan’s government debt rose by Rs1.452 trillion, or 2.1 per cent, reaching Rs70.366 trillion in the first five months of the current fiscal year, the central bank data showed on Monday.
This increase was due to the government’s spending needs exceeding its revenue collection and the need to repay external debt.As of June 30, 2024, the debt stood at Rs68.914 trillion.
At the end of November, the federal government’s total debt stock had increased by 1.8 per cent month-on-month and 11 per cent year-on-year (YoY).“Government debt has risen as the central government’s spending requirements exceed revenue collection during the month of November 2024,” said Awais Ashraf, director research at AKD Securities Limited.
“Nevertheless, the government repaid external debt amounting to $434 million in the past month,” Ashraf added.“Regarding local debt, the government has adjusted its mix towards longer tenure by increasing long-term debt by Rs1.8 trillion while reducing reliance on T-bills by Rs544 billion,” he said.
The SBP’s data showed that the domestic debt rose by 3.0 per cent, reaching Rs48.585 trillion during July to November FY25, up from Rs47.16 trillion a year earlier. This represents an 18 per cent increase YoY and a 2.86 per cent rise month-on-month at the end of November.
Similarly, the central government’s external debt increased to Rs21.78 trillion in the five months of FY25, reflecting a slight rise of 0.11 per cent. However, the foreign debt fell by 2.91 per cent YoY and 0.5 per cent month-on-month at the end of November.
The Federal Board of Revenue (FBR) did not meet its tax collection target for November, collecting Rs852 billion instead of the targeted Rs1,003 billion, resulting in a shortfall of Rs151 billion.
In a monetary policy statement issued last month, the SBP emphasised the importance of fiscal reforms to broaden the tax base in order to achieve targeted fiscal consolidation.The SBP noted that on the expenditure side, declining yields would lead to significant savings in interest payments on domestic debt compared to budget estimates. These reduced interest payments will assist the government in managing the fiscal deficit; however, achieving the planned primary surplus will be challenging. As such, considerable efforts and additional measures will be necessary to meet the annual revenue target.
According to the auction calendar released by the SBP, the government plans to raise Rs5.25 trillion through the sale of treasury bills and bonds from January to March to fulfil its budgetary needs and repay debt. The government aims to raise Rs2.2 trillion through the sale of Market Treasury Bills and Rs3.05 trillion through the auction of Pakistan Investment Bonds.
