The state bank of Pakistan shared the data regarding public debt that showed a 2.77% increase making the debt 32.6 trillion in only the first six months of the current fiscal year due to increase in domestic debt. According to the report, the public debt was at $31.786 trillion at the end of June 2019. The SBP data showed that domestic debt increased by 4.55% to Rs21.6 trillion at the end of December; however, the foreign debt decreased by 0.56% to Rs10.9 trillion.
But wasn’t the government on a zero borrowing policy?
Yes, the government has so far stuck to its policy of zero borrowing from the central bank, but has built up its deposits with commercial banks to create cash buffers for meeting the revenue-expenditure gap due to lack of funding sources, the report mentioned. The decline in external debt was driven by improvement in the current account balance, appreciation in the local unit against the dollar and higher debt repayments. The current account deficit fell 75% to $2.153 billion in July-December FY20.
But wait, does this effect us?
Analysts have argued that the decline in the budget deficit was likely to have positive implications for the public debt in the coming days. Budget deficit came in at 2.3% of GDP (gross domestic product) in the first half of this fiscal year, compared with 2.7% of GDP in the same period last year. The decline was due to a surge in the central bank’s profit and increased non-tax revenue. Read more from ProperGaanda: Nikah no longer has any legal standing in the UK