The government’s borrowing for budgetary support increased to Rs1.8 trillion over the first seven and a half months of FY23 despite fiscal, compared to a net retirement of Rs245.8 billion during the same period in FY22.
The government’s huge borrowing underscores its growing need for cash at a time when the IMF is pressuring it to cut costs and increase revenues.
According to data from the State Bank of Pakistan (SBP) covering the period from July 1, 2022, to February 17, the government could establish a record by the end of FY23 if it continues its aggressive bank borrowing trend.
There was a net retirement of debt in the first seven and half months, but the FY22 ended with Rs3.133tr budgetary borrowing.
Bankers predict that in order to cover the costs, the government will borrow significantly in the final three months of the current fiscal year. Despite new levies, increases in the price of gasoline, and a 1% increase in the general sales tax to 18%, revenue collection has fallen short of expectations thus far.
Although it is challenging to achieve, the budget for FY23 projected net federal government revenues of Rs7.47 trillion. Domestic debt servicing for the entire fiscal year was estimated at Rs3.95tr, but with the recent 300bps hike in the interest rate, it would surge to Rs5.4tr, according to analysts.
The IMF says the primary deficit is 0.9pc of GDP or around Rs840bn but the government puts it at 0.45pc or around Rs450bn.
