Debt repayment clocks in at Rs445.4 billion in July-Sept

ISLAMABAD: Pakistan’s debt repayment amounted to Rs445.370 billion in the first three months (July-September) of the current fiscal 2017/18 – an amount nearly double than the aggregate development and defence spending during the period, official data revealed on Wednesday.

Debt servicing (local and external) was equivalent to 1.2 percent of GDP in the first quarter as compared to 1.3 percent in the corresponding period a year earlier, the finance division’s data showed.

Defence expenditures consumed Rs181 billion and federal public sector development program Rs100 billion during the period. Pakistan’s budget revolves around three Ds: debt servicing, defence and development but the biggest expenditure item is now debt servicing on loans borrowed from domestic and foreign sources to finance the yawning budget deficit.

Official data showed that the financing of budget deficit of Rs440 billion of the first quarter was bridged through domestic avenues as borrowing from internal side stood at Rs432.876 billion and net foreign lending for financing budget deficit stood at just Rs7.946 billion.

In July-September, gross external financing received by Pakistan from all multilateral and bilateral creditors stood at Rs150.154 billion. External debt repayment consumed a major chunk of Rs142.208 billion during the period, so net financing for budget support shrunk to just Rs7.946 billion.

Government revised up budget deficit for the first quarter to 1.2 percent of GDP as against 0.9 percent of GDP envisaged by Ishaq Dar, finance minister on sick leave, in early October before his departure to London.

Budget deficit was brought down to around 4 and 4.5 percent of GDP from 8.2 percent of GDP during the first three years of the PML (N)-led regime when Islamabad was under the International Monetary Fund’s (IMF) loan program. In 2013, Pakistan signed a $6.6 billion worth of three-year loan program with IMF to bring down inflation and reduce fiscal deficit.

But, budget deficit again rose to 5.7 percent of GDP in the fourth fiscal 2016/17, indicating that the financial indiscipline was gripping the country after exit from IMF. The data showed the country fetched a total revenue of Rs1,025.102 billion, including tax revenue of Rs911 billion from both federal and provincial avenues as well as non-tax revenue of Rs113 billion in the first quarter of the current fiscal year. Total expenditures, during the period, stood at Rs1,465.24 billion.

Tax collection of the Federal Board of Revenue amounted to Rs765 billion in the first quarter, showing a strong growth of over 20 percent. The biggest ticket item on expenditure side was current expenditures of Rs1,240.5 billion, including debt repayments, defence and development spending and statistical discrepancy Rs3.983 billion.

The ministry’s spokesman said revenue collection especially tax revenue collection registered a strong growth of over 20 percent during Q1, while government borrowings both domestic and external were kept under check.

“In addition, there were expenditure controls as well,” the spokesman added in a statement. “This reflects on the prudent fiscal management during Q1 and government's resolve to maintain this momentum in the remaining quarters of the year.”