Since the last election in July 2018, the newly elected government had added a total of 2.42tr to the debt and it grows to Rs 26.64 trillion till December 2018.
The growth of debt is due to low revenues and high expenditures. FBR has failed to collect the revenue target. The government’s estimate shows that more than 70% of the total budget will go to debt and defense servicing, which is greater than the net revenues. Due to this, the International Monetary Fund (IMF) has proposed to target the primary budget balance, which means that the government has to lower its expenses than revenues.IMF has said that the only way to come out from the debt trap is by achieving primary balance.
The overall increase in the federal government debt seems not in line with the budget deficit requirements due to currency depreciation. The external debt of the central government increased by 16.7% to Rs.9.1 trillion in the first half of the current fiscal year. There was a net increase of Rs1.3 trillion in the external debt, largely due to currency devaluation.
The external debt of the federal government expanded by 16.7% to Rs.9.1 trillion while there was a net increment of Rs1.3 trillion in the external debt, mainly because of currency devaluation.
The expanding external debt remains a worry because of the past government’s failure to pull in non-debt making inflows and improve net incomes.
The PTI government has not yet changed the course of the monetary policy and it is to a great extent executing the arrangements pursued by the past Pakistan Muslim League-Nawaz (PML-N) organization.
SBP’s most recent debt bulletin shows that the most troubling perspective was the proceeded with development in the momentary domestic debt that presented the government to refinancing.
As opposed to the short term debt, the nation’s long term debt reduced by 3.7% to Rs7.2 trillion. Its share was 46% in the domestic debt in June 2018, which tumbled to 41.4% by December.
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