KARACHI: Data shared by the State Bank of Pakistan (SBP) showed that Pakistan’s public debt hit Rs32.7 trillion seeing an increase of 2.77% in the first six months of the current fiscal year due to an increase in domestic debt.
According to the report, the public debt was at Rs31.786 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.
The publication reported that 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 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 $2.15 billion in July-December FY20.
The report shared that revaluation gains due to the depreciation of major currencies versus the greenback also helped slow down the accumulation of foreign debt.
Analysts, who spoke to the publication, 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.
The International Monetary Fund (IMF) also acknowledged this improvement in the fiscal performance of the country.
“Fiscal performance in the first half of the fiscal year remained strong, with the general government registering a primary surplus of 0.7% of GDP on the back of strong domestic tax revenue growth. Development and social spending have been accelerated,” the IMF said in a latest statement.