The State Bank of Pakistan has revealed that the PTI government on average added Rs 15 billion daily to its debt. The federal government has borrowed Rs 2240 billion (Rs2.24 trillion) in last five months. The total debt stands at Rs 26.5 trillion. The data showed that the federal government’s debt taken from the central bank surged at an alarming pace of 87% in five months, standing at a record Rs6.73 trillion at the end of November 2018.
PTI leaders were used to criticise the previous governments of PPP and PML-N for taking loans. PTI leadership made the pledge that they will not only takes the new loans but also retire the foreign debts. But on the on the contrary to the claims made by the PTI leaders, its government is busy taking more loans on daily basis.
It was expected that PTI government will introduce new economic policies and seriously reform the economic structure. But nothing really changed on ground as government failed to change policies. Imran Khan gave the impression when he was in the opposition that he hates the debt and will avoid taking new loans. But now he celebrates every debt that Pakistan secured from friendly countries.
PTI government is learning the difference between criticising a government while sitting on the opposition benches and to run the state as government. PTI government is doing what it was used to criticise while sitting on opposition benches.
The SBP’s latest debt bulletin showed that the most worrisome aspect was the continued growth in the short-term domestic debt that exposed the government to refinancing and interest rate risks.
The federal government’s total domestic debt increased to Rs17.32 trillion, an addition of Rs906 billion or 5.5% in five months. The share of short-term public debt increased alarmingly to 58% or Rs10.1 trillion by the end of November. In June last year, the short-term domestic debt stood at 54.1% or Rs8.9 trillion. The short-term debt grew Rs1.2 trillion or 13.2% in five months.
The external debt of the central government increased 17% to Rs9.12 trillion in the first five months of the current fiscal year. There was a net increase of Rs1.33 trillion in the external debt due to 15.4% depreciation of the currency from July through November 2018.
The PTI government is taking loans to return the matured loans and to fill the gap in the tax collection. The debt servicing has increased at historic high levels in recent years. A steep shortfall in tax revenues coupled with uncontrolled spending on debt servicing also added to the debt burden. Latest results suggest that against the finance ministry’s estimates of adding Rs10 trillion to the public debt over the first three years of the PTI government, the actual increase may be far higher than that.
PTI government is implementing the same old policy of borrow more to spend more. There is no real difference between the economic policy of PML-N and PTI governments. The ballooning public debt remains a concern due to the previous government’s inability to attract non-debt creating inflows and enhance tax revenues. The PTI government has not yet changed the course of the fiscal policy and it is largely implementing the policies followed by the previous Pakistan Muslim League-Nawaz (PML-N) administration.
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22 March, 2019