ISLAMABAD: Data released by the State Bank of Pakistan on Wednesday showed the federal government’s debt has increased to Rs26.64 trillion, a net addition of Rs2.42 trillion in a space of six months.
During the first half (July-December) of the current financial year 2018-19, the government on average added Rs13.5 billion to its debt pile which includes 4.5 months tenure of the Pakistan Tehreek-e-Insaf (PTI) government.
In totality, the federal government’s debt rose to Rs26.64 trillion during the first half of FY19 and was 10% higher compared to June 2018, reports an English daily.
The increase in debt is directly attributable to a widening difference between revenue and expenditures because of debt servicing and defence spending and the tax regulators inability to boost tax collection.
As per the government projections, around 69% of the overall budget will be utilized in debt servicing and defence, which is higher than the net revenues of the federal government.
These debt statistics highlights the interest rate and refinancing risks have risen in the last six months since the federal governments’ short-term debt to 58.6% of the overall domestic debt.
Around Rs200 billion in debt was added in December alone, however, the speed of debt accumulation has slowed due to a relatively stable exchange rate.
Due to a hike in interest rates by the central bank has added around Rs500 billion into the cost of debt.
Also, the external debt of the central government rose 16.7% to Rs9.1 trillion during the first half of FY19.
Due to currency devaluation, a net increase in external debt of Rs1.3 trillion was experienced.