ISLAMABAD: Domestic borrowing shot up to Rs853 billion in the first two months of the current fiscal year of 2017/18 as government had to pay down maturing debts, a statement said on Tuesday.
Domestic debt recorded an increase of Rs853 billion during the first two months of the current fiscal year, while it settled at Rs520 billion during the first quarter (July-September) of 2017/18.
“The temporary increase in domestic debt, during first two months of current fiscal year, was due to timing mismatch between revenue and expenditures and on account of cash buffers built to comfortably meet the maturities,” finance ministry said in a statement.
But, the revenue picked up and government reduced its cash buffers primarily to retire some of the in-quarter borrowings. Resultantly, domestic debt stock was reduced by Rs333 billion during the month of September 2017.
Seasonality in government borrowings/deposits during short period is usually reversed at the end of each quarter.
“Specifically, any disconnect between borrowing and fiscal deficit financing is reversed on half yearly or annual basis, which is a normal practice throughout the world and Pakistan is no exception,” the statement said.
Of gross increase in domestic debt amounting Rs520 billion, net increase in domestic debt was recorded at Rs428 billion, while the rest of the increase went to increase the liquid assets of the government that could be used in the subsequent period towards meeting government’s financing requirement.
The statement further said external public debt recorded a provisional increase of approximately Rs132 billion, “which was predominantly driven by translational losses on account of appreciation of international currencies against US dollar and depreciation of rupee against dollar.” “Therefore, incremental mobilisation from external sources was almost negligible during first quarter of current fiscal year,” it added.
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