ISLAMABAD  -  The federal government is continuously borrowing to meet its soaring expenditures as it added Rs3.36 trillion in debt in eight months period.

From July through February, the federal government borrowing increased by 13.9 percent or Rs3.37 trillion, according to the State Bank of Pakistan’s statistics. Pakistan’s overall public debt has surged to Rs27.57 trillion by the end of February 2019.

The PTI, who criticized the previous governments for taking loans, had massively borrowed Rs2.8 trillion during first six months of its tenure.  The debt was Rs24.732 trillion in August 2018 when the PTI took the charge of the government, which has now gone to Rs27.57 trillion. 

The country’s borrowing from both, domestic and foreign, sides has increased during first seven months of the ongoing fiscal year. The domestic borrowing has gone to Rs18.343 trillion in February 2019 as compared to Rs16.416 trillion in June 2018, showing an increase of 11.7 percent.

Similarly, the foreign debt has increased to Rs9.23 trillion in January 2018 as against Rs7.796 trillion in June 2018. Therefore, the country’s public debt including domestic as well foreign has recorded at Rs27.574 trillion by the end of February 2019. 

The figures do not include loans of $9 billion acquired from China, Saudi Arabia, and the United Arab Emirates. Those loans are the responsibility of the central bank. Pakistan’s debt is rapidly increasing to overcome the gap between expenditures and revenues, which is causing by the massive revenue shortfall in tax collection.

The FBR’s tax shortfall has gone up to Rs317 billion in first nine months (July-March) period of the current fiscal year as the tax collection machinery collected Rs2,681 billion against the desired target of Rs2,998 billion.

The government is struggling to restrict the budget deficit despite introducing two mini budgets in last six months. The government had upward projected the budget deficit to 6.3 percent of the GDP (Rs2.39 trillion) for the ongoing fiscal year as against the target of 5.1 percent of the GDP.

According to the SBP’s statistics, the federal government’s total domestic debt increased to Rs18.34 trillion, an addition of Rs1.93 trillion or 11.8 percent in first eight months of the fiscal year. The share of short-term public debt increased alarmingly to 57.5 percent or Rs10.53 trillion by the end of February 2019.

Apart from other reasons, the government’s massive borrowing is also fuelling the inflation rate. Pakistan inflation rate has touched five years highest level of 9.41 percent during March 2019 mainly due to the economic policies of the incumbent government and its borrowing from the central bank.

The annual inflation rate is the highest since April 2014, when it had hit 9.12 percent. Inflation has increased due to the government’s economic policies including increasing power and gas prices, devaluing the currency, and taxing imported commodities. Other reason behind soaring inflation is the massive government’s borrowing from central bank to meet its expenditures.