The Pakistani government’s total debt rose by 15.3% in the first 11 months of the fiscal year FY22. The total debt of the Pakistan government was 38.704 trillion Pakistani rupees (Rs 1,48,64,47,66,60,184) in June 2021 and increased to 44.638 trillion Pakistani rupees (Rs 1,71,43,46,08,60,823) in May, The Dawn newspaper reported, citing the State Bank of Pakistan. The Pakistan government’s domestic debt and liabilities have also witnessed a rise of 10.7% in 11 months in FY22.
The Pakistan government’s domestic debt and liabilities increased from 26.968 trillion PKR (Rs 1,03,60,09,35,58,380) in June 2021 to 29.850 trillion PKR (Rs 1,14,67,24,98,04,125) in May. Domestic debt causes a serious problem in the growth of the economy as most of the revenues get utilised for paying the debts, according to ANI. The domestic debts have been witnessing a rise every year which reduces the annual development budget of Pakistan. As per the news report, the government in Pakistan has been announcing a higher amount for development; however, the funds get reduced by the end of the fiscal year due to rising domestic debts.
Pakistan’s foreign exchange holdings reduce to $15.742 billion
The increase in the government’s total debt comes at a time when the foreign exchange reserves of the SBP were reduced by $493 million during the week that ended on June 30, according to ANI. Furthermore, the overall foreign exchange holdings of Pakistan also reduced to $15.742 billion (Rs 12,48,85,45,76,300) and the reserves of commercial banks have reached $5.926 billion (Rs 4,70,12,52,83,900). Meanwhile, the State Bank of Pakistan has revealed that the inflation in Pakistan will stay between 18 to 20% in this fiscal year.
IMF planning to forbid Pakistan from asking more loans from China for CPEC
Meanwhile, the International Monetary Fund (IMF) is reportedly planning to forbid Pakistan from seeking additional loans from China, according to ANI. According to reports, the global financial body’s recommendations are now likely to be a deciding factor in Islamabad’s decision to ask China for 7.9 billion PKR for projects related to the China-Pakistan Economic Corridor (CPEC).
The IMF has voiced objections to Pakistan’s loans from China and the arbitrarily high amount paid to Chinese Independent Power Producers, ANI reported, citing Financial Post. As per the news report, Pakistan owes more than 350 billion PKR in power payments to Chinese IPPS that function in the country. Furthermore, more than 40% of Pakistan’s federal budget’s total spending has been devoted to debt service which has witnessed an increase of 29.% from the last year.