Business

Public debt up by 22% to nearly Rs60tr in July 2023

Published

1 year ago

Farwa

Total debt up by 22.11% year-on-year to Rs61.75 trillion.
Total govt debt was Rs50.57 trillion in July 2022.
Month-on-month debt increased by 1.49%.

KARACHI: The federal government’s total debt surged to nearly Rs60 trillion, primarily attributed to borrowing from domestic and foreign sources to cover the fiscal deficit, The News reported Wednesday.

The total debt of the government was up by 22.11% year-on-year to Rs61.75 trillion in July 2023, compared to Rs50.57 trillion in July 2022, the State Bank of Pakistan (SBP) data showed on Tuesday.

On a sequential basis, the debt of the government witnessed an increase of 1.49% month-on-month compared to Rs60.84 trillion in June 2023. The increase in debt burden is primarily attributed to borrowing from domestic and foreign sources to cover the fiscal deficit.

The central bank data showed the larger portion of the debt was domestically clocked in at Rs39.02 trillion, signifying a growth of 24.08% year-on-year, comprising Rs29.59 trillion long-term debt and Rs9.29 trillion short-term debt while the remaining Rs22.73 trillion was external.

By the end of July 2023, the government’s long-term debt increased by 24.44% year-on-year to Rs29.59 trillion as compared to Rs23.78 trillion recorded in the same period a year ago. Similarly, the short-term debt jumped by 27.14% year-on-year as opposed to Rs7.31 trillion in July 2022.

Within the long-term domestic debt, the Pakistan Investment Bonds (PIBs) accounted for Rs22.06 trillion, up by 27.40% year-on-year. Meanwhile, in the short-term domestic debt, Market Treasury Bills (MTBs) amounted to Rs9.22 trillion, up by 27.14% YoY.

Borrowing through Naya Pakistan Certificates (NPCs) has risen by 26.71% YoY to stand at Rs139 billion in July 2023. A breakup of the government’s external debt shows that nearly Rs22.67 trillion came from long-term loans while Rs65.2 billion came from short-term loans.

The country’s total debt and liabilities rose by 29% to Rs77.1 trillion in the last fiscal year of 2022/23.

At the end of the last fiscal year, the country’s debt and liabilities, including domestic and foreign, totalled Rs77.104 trillion, up from Rs59.772 trillion the year before.

The total debt and liabilities as a percentage of GDP increased to 91.1% in 2022/23. The nation’s debt rose 28.4% to Rs72.991 trillion, while the liabilities increased 34.6% to Rs4.587 trillion in FY2023.

To finance its expanding budget deficit and to cover the cost of repaying its domestic debt, the government borrowed heavily from domestic sources, namely commercial banks.

The government borrows funds from commercial lenders, multilateral institutions, the Paris Club, and international financial institutions to meet budget deficits, finance the current account gaps, and build up foreign exchange reserves.

However, a steep decline in the value of the local currency caused the amount of foreign debt to rise, reaching Rs32.495 trillion in FY2023. The rupee’s value fell by 41% during the last fiscal year.

In July, the International Monetary Fund (IMF) approved a fresh $3 billion bailout for Pakistan’s struggling economy, which had been dangerously near to defaulting on its debt.

The IMF and friendly nations provided the country with $4.2 billion in financial support in July. The country received inflows of $2.0 billion from the Kingdom of Saudi Arabia, $1.2 billion from the IMF, and $1 billion from the United Arab Emirates.

Analysts said that it appears that the government’s budgetary borrowings remained high this year and the country’s projected FX inflows from bilateral and multilateral sources will be the only way to cover its gross external funding needs.

The SBP anticipates that the foreign exchange reserves will rise to $12 billion by the end of this fiscal year, although the reserves could fall if there is significant pressure on the current account.

Due to anticipated increases in debt servicing expenses amid the high-interest rate environment in the nation, our budget deficit appears to be on an upward trend. Imports have not yet been fully opened, but if they are, tax revenues will increase.

Business

With its second-largest surge ever, PSX approaches 114,000 points.

Published

1 day ago

Farwa

Driven by renewed activity from both private and government financial institutions, the Pakistan Stock Exchange (PSX) saw its second-largest rally in history on Monday.

The market regained many important levels in a single trading session as it rose with previously unheard-of momentum.

Intraday trading saw a top increase of 4,676 points, and the PSX’s benchmark KSE-100 Index gained 4,411 points to settle at 113,924 points. This impressive rebound demonstrated significant investor confidence by reestablishing the 100,000, 111,000, 112,000, and 113,000-point levels.

The market also saw the 114,000-point limit reestablished during the trading session.

The positive tendency was reflected when the market’s heavyweight shares touched its upper circuits. Among the most busiest trading sessions in recent memory, an astounding 85.78 billion shares worth a total of Rs55 billion were exchanged.

Experts credited the spike to heightened institutional investor activity and hope for macroeconomic recovery. Considered a major market recovery, the rally demonstrated the market’s tenacity and development potential.

Business

In interbank trade, the Pakistani rupee beats the US dollar.

Published

1 week ago

Farwa

In the international exchange market, the US dollar has continued to weaken in relation to the Pakistani rupee.

The dollar fell to Rs278.10 from Rs278.17 at the beginning of interbank trading, according to currency dealers, a seven paisa loss.

In the meantime, there was a lot of turbulence in the stock market, but it recovered and moved into the positive zone. The KSE-100 index recovered momentum and reached 116,000 points after soaring 1,300 points.

Both currency and stock market swings, according to analysts, are a reflection of ongoing market adjustments and economic uncertainty.

Business

Phase II of CPEC: China-Pakistan Partnership Enters a New Era

Published

1 week ago

Farwa

The cornerstone of economic cooperation between the two brothers and all-weather friends is still the China-Pakistan Economic Corridor, the initiative’s flagship project.

In contrast to reports of a slowdown, recent events indicate a renewed vigour and strategic emphasis on pushing the second phase of CPEC, known as CPEC Phase-2, according to the Ministry of Planning, Development, and Special Initiatives.

According to the statement, this crucial stage seeks to reshape the foundation of bilateral ties via increased cooperation, cutting-edge technology transfer, and revolutionary socioeconomic initiatives.

Planning Minister Ahsan Iqbal is leading Pakistan’s participation in a number of high-profile gatherings in China, such as the 3rd Forum on China-Indian Ocean Region Development Cooperation in Kunming and the High-Level Seminar on CPEC-2 in Beijing.

His involvement demonstrates Pakistan’s commitment to reviving CPEC, resolving outstanding concerns, and developing a strong phase-2 roadmap that considers both countries’ long-term prosperity.

At the core of these interactions is China’s steadfast determination to turn CPEC into a strategic alliance that promotes development, progress, and connectivity.

Instead of being marginalised, CPEC is developing into a multifaceted framework with five main thematic corridors: the Opening-Up/Regional Connectivity Corridor, the Innovation Corridor, the Green Corridor, the Growth Corridor, and the Livelihood-Enhancing Corridor.

With the help of projects like these, the two countries will fortify their partnership, and CPEC phase-2 will become a model of global economic integration and collaboration that benefits not just China and Pakistan but the entire region.