ISLAMABAD-Finding no other option to run its soaring expenditures, the incumbent government has heavily relied on taking massive loans from different sources, as country took Rs 1168 billion loans in nine months (July-March) of the outgoing financial year (2013-2014).

Pakistan’s public debt has swelled to Rs 15.534 trillion by the end of March 2014, which is eight per cent higher than the loan of previous year. According to the ‘Economic Survey 2013-2014’, Pakistan’s pubic debt was recorded at Rs 15.534 trillion by the end of March 2014. The volume of public debt has enhanced by Rs 1168 billion in one year, as it was Rs 14.366 trillion in last year.

The break-up of Rs 15.534 trillion showed that country’s domestic debt is Rs 10.823 trillion and external debt is Rs 4.711 trillion by the end of March, 2014. However, the country’s debt-to-GDP ratio went down to 61.2 per cent during outgoing fiscal year as against 63.9 percent of the previous year.

The primary source of increase in public debt during first nine months of current fiscal year was in domestic debt that positioned at Rs.10,823 billion, representing an increase of Rs.1,306 billion, whereas, external debt posed at Rs.4, 711 billion, representing a decrease of Rs.138 billion as compared to end June 2013. The decline in external debt during first nine months of current fiscal year is mainly attributed to net repayments and appreciation of Pak Rupee against US Dollar.

Over the past few years, government relied mainly on the domestic borrowing, which resulted in gradual increase of its share to around 70 percent of the total public debt as at end March, 2014 compared to 51 percent in 2008-09.

According to the Economic Survey, Pakistan’s fiscal deficit saw significant variation from its original targets over the last few years. The fiscal deficit during 2012-13 was recorded at 8.2 percent of GDP (including payment of Rs.322 billion on account of settlement of circular debt) against the budgeted estimate of 4.7 percent. The deviation from initial estimates was mainly on account of three factors: higher than budgeted subsidies; higher than budgeted interest payments owing to increased domestic borrowings and lower than target FBR tax revenues. The higher fiscal deficit during last few years has increased the public debt and resultantly the government has to allocate more resources towards public debt servicing i.e. around 47 percent of total revenues have been consumed in debt servicing during first nine months of current fiscal year.

The Economic Survey further revealed that domestic debt servicing was Rs.855 billion against Rs.725 billion paid during the same period last year. Further analysis of domestic debt servicing revealed that large portion was paid against Treasury Bills (260 billion), Market Related Treasury Bills (181 billion), Pakistan Investment Bonds (Rs. 147 billion) etc.

The Survey report concluded as present government is committed to accomplish objectives outlined in Fiscal Responsibility and Debt Limitation Act, 2005.