Because of extensive borrowing from local and global resources, the federal government’s total debt stocks reached an all-time high of Rs 59 trillion by the end of May 2023.
The central government’s overall debt (domestic and external) increased by 23% during the first 11 months of this fiscal year (FY23), according to the State Bank of Pakistan (SBP).
Overall, the federal government’s entire debt stock climbed to an all-time high of Rs 58.962 trillion at the end of May 2023, up from Rs 47.832 trillion in June 2022, a Rs 11.13 trillion rise.
The central government’s borrowings from domestic resources increased by 19 percent, or Rs 5.969 trillion, to Rs 37.54 trillion in May 2023, up from Rs 31.085 trillion in June 2022.
The government’s domestic borrowings were dominated by long-term loans of Rs 29.48 trillion and short-term borrowing worth Rs 7.433 trillion.
During the first eleven months of this fiscal year, the external debt in rupee terms increased by 31%, or Rs 5.161 trillion. Total external debt stocks increased to Rs 21.908 trillion at the end of May 2023, up from Rs 16.747 trillion in June 2022.
The significant change in external debt is mostly attributable to the substantial depreciation of the Pakistani rupee against the US dollar during this fiscal year. According to the SBP, the last day Weighted Average Customer Exchange Rates for the US dollar were 204.3784 in June 2022, and 286.3835 in April 2023.
Although the country has repaid a significant sum to international lenders this fiscal year, it is still looking for new routes for additional borrowing in order to avoid default and build its dwindling foreign exchange reserves.
The country is in the grip of a severe financial crisis and is seeking new foreign inflows to shore up its foreign exchange reserves, which stand at $ 9.3 billion, including $4 billion from the SBP and $5.2 billion from commercial banks.