ISLAMABAD - Apart from the foreign borrowing, the federal government’s domestic borrowing is also increasing massively as the total domestic debt surged to Rs17.3 trillion by the end of November last year.

The federal government’s domestic borrowing was recorded at Rs17.3 trillion by the end of November 2018. The loan has increased by Rs906 billion in five months (July to November) of the ongoing fiscal year 2018-19, according to the latest data of State Bank of Pakistan (SBP). In domestic borrowing, the short-term debt has increased to Rs10.1 trillion by the end of November 2018 as against Rs8.9 trillion of June2018. The short-term domestic debt has shown an increase of over 13 percent in five months of the ongoing fiscal year. In contrast to the short-term debt, the country’s long-term debt decreased 2.6 percent to Rs7.3 trillion.

According to the data, the federal government’s overall debt increased to Rs26.45 trillion, a net addition of Rs2.24 trillion from July through November. The break-up of Rs26.45 trillion showed that central government external debt was recorded at Rs9.13 trillion and domestic borrowing at Rs17.3 trillion.

In the first five months, the federal government retired the debt got through market treasury bills (MTBs) from commercial banks. The government’s total borrowing through MTBs decreased from Rs5.2 trillion to Rs3.3 trillion, a reduction of around Rs2 trillion. In contrast, the MTBs issued to replenish the cash rose to Rs6.7 trillion, a net addition of Rs3.1 trillion or 86% from July through November.

Meanwhile, the central government debt has increased by Rs613.2 billion in the month of November as compared to October. The federal government had borrowed Rs162 billion from the domestic and Rs450 billion from the foreign sources during the month of November. The federal government is borrowing from domestic and foreign sources to finance the budget deficit, which is sharply increasing. 

The government is borrowing from various sources as the Federal Board of Revenue (FBR) is struggling to achieve the annual tax collection target. The FBR has provisionally collected net revenue of over and above Rs 1,779 billion during first half (July-December) 2018-19 against target of Rs 1,949 billion, reflecting a shortfall of Rs 170 billion. The FBR has provisionally collected Rs 1779 billion during first half (July-December) 2018-19 against Rs. 1722 billion in same period of 2017-18, showing an increase of Rs 7 billion. The FBR could not achieve the tax collection target despite PTI led government had introduced mini budget in mid September.