KARACHI - The domestic debt of Pakistan is mounting towards Rs4 trillion mark as the debt had gone up to Rs 3.884 trillion from July 2008 to May 09, 2009. In 11 months of the current financial year the domestic debt had reflected an alarming increase of Rs 618 billion or 19pc, which is the highest-ever growth in a year. In 2007-08, the domestic debt stood at Rs3.266 trillion that had been expanded to Rs3.884 trillion because of massive borrowings triggered by a wide gap in the fiscal deficit and lower tax-to-GDP ratio. This strong growth in domestic debt reflects non-realization of privatisation proceeds and reduced availability of net external financing due to increase in external debt repayments on maturing stock of foreign currency bonds. The break-up of the domestic debt data reveals that the outstanding stock of permanent debt stood at Rs 675.6 billion at the end of May 2009, against Rs 604.8 billion of last fiscal year while the stock of PIBs surged to Rs 441 billion during July- May FY09. Floating debt increased to Rs 1.954 trillion during July-May FY09 from Rs 1.637 trillion in the corresponding period last year. The stock of T-bill holdings by SBP still constitute a major share in floating debt, reflecting governments heavy reliance, in the past 16 months, on the central bank to finance the budget deficit. The outstanding stock of MRTBs went up to Rs 745.5 billion during Jul-Jan FY09 as against Rs 537 billion in the same period last year. Un-funded debt amounted to Rs 1.253 trillion from Rs 1.02 trillion during Jul-May FY09. Gross sales of major NSS instruments, i.e., Behbood Saving Certificate (BSC), Special Saving Certificate (SSC) and Pensioner Benefit Account (PBA) went up significantly during the period. Meanwhile, according to the SBP monetary aggregate for the period July to June, 2009, the fiscal and budgetary related borrowings of the centre had amounted to Rs 600 billion from July to June 2009. The government borrowed worth Rs401.6 billion from SBP, scheduled commercial banks and money market from July 1, 2008 to June 13, 2009 for the purpose of fiscal and budget financing as against Rs476.3 billion in FY08. Inline with some pre-budget estimates, majority of the financing will come from external sources. This should ease the pressure on domestic borrowing and thus market borrowing. It is estimated that the government will issue US$500 million worth Eurobonds, raise Rs19 billion through privatisation, a paltry Rs5.0 billion through PIBs and net Rs1.0 billion through treasury bills. The bank borrowing is expected to be at Rs144 billion for next year.