SBP data reveals over 27% surge in central govt debt

circular debt

WEB DESK: The latest data released by the State Bank of Pakistan (SBP) reveals a notable increase in the central government’s total debt. In December 2023, the debt surged by 27.68 per cent year-on-year (YoY), reaching Rs65.19 trillion compared to Rs51.1 trillion in January 2022.

Analyzing the figures on a sequential basis, there was a 2.84 per cent month-on-month (MoM) rise in central government debt, standing at Rs63.39 trillion in November 2023.

The substantial YoY increase in the debt burden is primarily attributed to borrowing from both domestic and foreign sources, aimed at covering the fiscal deficit.

Breaking down the details provided by SBP, the major portion of the debt, totaling Rs42.59 trillion, was domestic. This signifies a YoY growth of 28.4 per cent. Within this domestic debt, there was a distinction between Rs34.1 trillion in long-term debt and Rs8.37 trillion in short-term debt. The remaining Rs22.6 trillion constituted external debt.

As of December 2023, the government’s long-term debt increased by 26.7 per cent YoY to Rs34.1 trillion, compared to Rs26.91 trillion recorded in the same period the previous year. Similarly, short-term debt witnessed a 32.06 per cent YoY increase, reaching Rs8.37 trillion from Rs6.16 trillion in December 2022.

Examining the components of the long-term domestic debt, Pakistan Investment Bonds (PIBs) accounted for Rs25.61 trillion, reflecting a YoY growth of 26.1 per cent and a MoM increase of 2.5 per cent. In the short-term domestic debt category, Market Treasury Bills (MTBs) amounted to Rs8.29 trillion, showing a YoY rise of 36.1 per cent and a MoM increase of 9.9 per cent.

Borrowing through Naya Pakistan Certificates saw an 8.2 per cent YoY increase, reaching Rs118.7 billion in December 2023. However, on a monthly basis, there was a 5.4 per cent decrease compared to Rs125.5 billion in November 2023.

A breakdown of the central government’s external debt reveals that nearly Rs22.57 trillion came from long-term loans, while Rs28 billion came from short-term loans.

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