Public debt rises to Rs35.50trln by Oct end

KARACHI: Pakistan’s public debt increased 1.13 percent or Rs397 billion to Rs35.504 trillion by the end of October 2020, the central bank data showed on Friday.

By June this year, public debt was standing at Rs35.107 trillion, while it was recorded at Rs32.197 trillion at the end of October 2019.

The domestic debt rose 2.8 percent to Rs23.934 trillion; however, foreign debt

fell 2.15 percent to Rs11.569 trillion, according to figures released by State Bank of Pakistan.

The major increase in the public debt in the period under review came from the government’s domestic borrowing for deficit financing.

However, the share of the government’s external debt continued to decrease.

Zero fresh borrowing from the central bank compelled the government to rely on commercial banks for its financing needs. So, their contribution in the domestic debt remained higher.

Budget deficit continued to rise despite a squeeze on defence and development spending. A sluggish growth in the tax and non-tax revenues led the increase in the budget deficit.

The budget deficit in the first quarter of this fiscal year stood at 1.1 percent of gross domestic product or Rs484 billion, compared with 0.7 percent of GDP or Rs286 billion in the same period last year.

The government has set a budget deficit target for FY2021 at Rs3.43 trillion or 7.5 percent of GDP.

By and large, the pace of public debt accumulation showed a slowdown as utilisation of accumulated government deposits,

lower revaluation losses, and higher debt servicing helped control the speed of debt buildup.

The implementation of the G-20 Debt Service Suspension Initiative is likely to ease pressures on debt servicing and provide fiscal space to spend on social and health sectors.