Public debt hits Rs33.421 trillion in July-Feb FY20

KARACHI: Pakistan’s public debt rose by 5.14 per cent to Rs1.635 trillion during the period of July-February FY2020 due to increase in domestic debt accumulation.

According to the data released by State Bank of Pakistan, public debt was Rs33.421 trillion at the end of February 2020, up from Rs31.786 trillion till end June 2019.

Domestic debt increased 7.02 per cent to Rs22.188 trillion at the end of February, while foreign debt rose by 1.60 per cent to Rs11.232 trillion.

Overall growth in the country’s debt was up-driven primarily due to weak financial position, shortfall in tax revenue, higher interest payments due to monetary tightening, and expenditures.

Moreover, domestic debt bloated in the same period owing to long-term debt. The government relied heavily on the expensive borrowing from commercial banks to meet its revenue-expenditure gap.

Analysts maintain a significant hit on its government’s revenues is likely because of the shutdown of industries and lower aggregate demand amid the coronavirus outbreak.

The Federal Board of Revenue (FBR) tax collection fell short by Rs200 billion in March 2020 which is likely to trigger Pakistan’s budget deficit up to 9.0 per cent of the gross domestic product in FY20 and subsequently clock in at 8.0 per cent of GDP in FY21.