The government’s domestic debt and liabilities increased by 12 percent to Rs26.755 trillion during the 11 months of the present financial year (11MFY21) compared to Rs23.876tr in June 2020.
The government borrowed Rs2.88tr during 11MFY21, with most of the quantity accumulated through the Pakistan Investment Bonds and market treasury bills (T-bills). The PIBs attracted $263 million also as a foreign investment during FY21. the govt borrowed Rs1.437tr through the auction of PIBs in 11MFY21 which enhanced the total amount to Rs14.323tr till May FY21. the quantity of PIBs in June 2020 was Rs12.886tr.
Similarly, the govt raised an outsized amount through the T-bills but still, it had been but the PIBs. The PIBs offer far better returns (for instance 10 percent return on benchmark 10-year PIBs). Since the rate of interest remained unchanged for nearly a year, investors preferred to take a position in short-term T-bills. Despite this advantage of short-term, huge investment has accumulated with the PIBs which reached Rs14.43tr. the most important amount of long-term PIBs was raised during the previous government which built up domestic debts but saved the govt from immediate repayments; creating space for this government to borrow more.
The government raised Rs1.084tr during 11MFY21 because it increased to Rs6.658tr in May FY21 from Rs5.575tr in June 2020.
The participation of liabilities in overall domestic debt and liabilities isn’t significant while the liableness of the govt increased by just Rs97bn to succeed in Rs689.5bn till May FY21.
The government succeeded to keep the fiscal deficit within the home in FY21 despite providing a huge amount to support the poor drastically suffering from the Covid-19 pandemic. the govt also succeeded in achieving an unexpectedly higher rate of growth of three .9pc during FY21 which encouraged it to allocate a higher amount for Public Sector Development Programme for FY22.
