Government borrowings from commercial banks reach historic highs 5.5 trillion Panama 2.95 billion in the corresponding period of the previous year for July 1, 2023 to April 5, 2024, as per State Bank of Pakistan (SBP) data.
The economy is heavily burdened by this huge amount of borrowing, as the domestic debt leaves no room for any other revenue allocation. interest payments. The government is expected to spend more than half of its total budget on interest payments, Dorn said.
In fiscal year 2023, the government received loans amounting to Rs 3.7 trillion from banks. However, the current scenario seems worrying as the government has exceeded the previous year’s amount by Pk 1,784 billion in the first nine months.
It is common for governments to carry out large-scale policies. borrow Information from banks is provided in the last quarter of the fiscal year to provide a more favorable indication of economic performance.
According to Pakistan-based daily news, the economy is facing significant challenges at home and abroad. Most of the revenue generated goes towards services. domestic debt And interest. This large outflow limits the government’s ability to launch new development programs. Instead, a significant portion of development funds will be reallocated to other areas.
The external scenario is even more dire as Pakistan’s declining repayment capacity makes it difficult to borrow. Pakistan needs support from the IMF to improve its reputation among foreign investors. However, the government has faced obstacles in borrowing from international markets over the past two years.
Financial experts say the new agreement with the IMF could “open a window for Pakistan to borrow from international markets.” It also stressed that “time is needed to sustain growth and remove the main reasons for uncertainty.”
Current bank borrowings could reach up to Rs 7 trillion by the end of June 2024, according to analyst estimates. “Governments are raising energy prices but are not generating enough revenue to cover their spending,” Dawn’s report highlighted. ‘