Islamabad [Pakistan], April 20 : Owing to the economic crisis, the Pakistan government led by Prime Minister Shehbaz Sharif borrowed over Pakistan currency (PKR) 650 billion from banks to meet its rising expenditures within a week, Dawn reported on Saturday.
The State Bank of Pakistan (SBP) data showed that the government's borrowing from commercial banks reached a record PKR 5.5 trillion from July 1, 2023 to April 5, 2024. This is against PKR 2.95 billion in the same period last fiscal year.
Only last week, as reported by the SBP on April 13, the government's borrowings from the commercial banks were PKR 4.842 trillion. It shows during a week the government borrowed PKR 657 billion to reach PKR 5.5 trillion.
This massive borrowing is overburdening the economy, with the domestic debts not leaving space for revenue allocation other than interest payments. The government will have to pay more than half of the total budgetary outlay in interest payments, Dawn reported.
During FY23, the government borrowed PKR 3.7 trillion from banks, but the current situation looks alarming as the government has exceeded last year's level by PKR 1.784 trillion in the first nine months.
The government usually borrows heavily from banks in the last quarter of a fiscal year to paint a better picture of the economic performance.
According to the Pakistan-based news daily, the economy is in serious trouble on both internal and external fronts. The maximum revenue generated is used to pay back the domestic debt and interest. This considerable outflow does not leave space for any government for new development programmes; instead, most of the development funds are slashed for other sectors.
The situation is even worse on the external front, where borrowing is difficult as Pakistan's repayment capacity has been reduced to the lowest level. Pakistan needs IMF help to restore its image for foreign investors, but for the last two years, the government has been unable to borrow from international markets.
Financial experts believe that the new agreement with the IMF may open a window for Pakistan to borrow from the international market. However, they believe time is required to sustain growth and remove major reasons for uncertainties.
Analysts estimate that the current borrowing from banks could touch PKR 7 trillion by the end of June 2024. The government has been increasing energy prices but has not generated enough revenue to meet its expenditures, Dawn reported.
On Friday, Prime Minister Narendra Modi told an election rally in Madhya Pradesh's Damoh that with "clouds of war" spreading across the world, India is powering on as world's fastest developing nation, adding "one of our neighbours, which was a supplier of 'aatank (terrorism)', is now struggling to procure 'atta' (flour)," alluding to Pakistan, where inflation rate is as high as 20 per cent.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor