The federal government has borrowed a massive amount of Rs 238 billion for the budgetary support within 86 days of the current fiscal.
The government borrowed Rs 220 billion from the State Bank of Pakistan, while the remaining Rs 18 billion were borrowed from other sources between July and September.
The government’s average daily borrowing is estimated at Rs 2.76 billion and the borrowing has increased by Rs 215 billion as compared to the same period the previous year.
The huge increase in the government’s borrowings, mainly from the State Bank of Pakistan, reflects the fast-growing fiscal deficit and government’s financial reliance on the central bank, sources told Pakistan Today.
Except Punjab, the provincial governments’ borrowings for budgetary support have been negative, as the Centre has taken a large chunk of money from the SBP, leaving no room for provinces to borrow money, sources said.
The Punjab government has borrowed Rs 1.70 billion in this fiscal, whereas it borrowed Rs 34 billion in the same period last year.
The central bank’s credit to the private sector has also registered a negative trend, down by Rs 72 billion from July-September 24, 2010, indicating that the sector is reluctant to borrow due to high mark up rates.
Sources said the federal government had failed to reduce its fiscal deficit and enhance the tax-to-GDP ratio to the required level, while the recent floods had also contributed to the government’s borrowing.
The International Monetary Fund and key international donor countries, especially the US, have asked the government to increase revenue resources to minimize dependence on borrowings.
The sources said the economic crisis would deepen further if the government failed to control its borrowing and the fiscal deficit.