KARACHI: The first half of the current fiscal year, which ended on December 31, had a negative government borrowing from banks for budgetary support, suggesting increased liquidity in the national exchequer.
According to the State Bank’s most recent figures, net debt retirement for the July 1–December 13 period was Rs2.03 trillion, while net borrowing for the same period previous year was Rs2.875 trillion.
According to experts, this is significant because governments have historically borrowed large sums of money to fund their budgets, and the State Bank’s profit inflows of Rs2.7 trillion may be the cause of this debt retirement.
Additionally, they pointed out that this debt retirement was noteworthy because the Federal Board of Revenue (FBR) failed to meet the anticipated collection goal in the first five months of 2024–2025.
Brimming with cash, the state retires Rs. 2.03 trillion in debt between July and December.
The amount borrowed by the government for budgetary support doubled from FY23 to FY24, totaling Rs7.479 trillion compared to Rs3.748 trillion in FY23.
One of the main points was the borrowing, which demonstrated the fiscal deficit. Despite a provincial surplus of Rs518.213 billion, the budget deficit in FY24 was 6.8% of GDP, or Rs7.206 trillion.
In FY24, this fiscal deficit was adjusted to 7.4% of GDP. The fiscal deficit needs to be lower than it was the previous year because the nation is a part of the IMF program.
FY25’s total budget deficit is Rs7.283 trillion, or 5.9 percent of GDP, which is less than the revised 7.4 percent in FY24. The entire budget expenditure for FY25 is Rs18.9 trillion, which includes net foreign receipts, bank and non-bank borrowing, tax and non-tax gross revenue receipts, and earnings from privatization. The predicted rate of economic growth is 3.6 percent.
According to financial experts, the government will borrow money in the second half of the current fiscal year to sustain its budget because the FBR is falling short of the collection objective.
The administration has yet to implement the economic reforms agreed upon with the IMF, according to independent economists’ writings. According to them, failure to carry out the planned reforms might lead to major issues, and the IMF review mission for the first review under the 37-month, $7 billion Extended Fund Facility is due in March.
The government has not yet increased revenue to the desired level, which could lead to a larger budget deficit than anticipated.
According to figures from the State Bank, by the end of June 2024, the borrowing stock for fiscal support had grown to Rs29.723 trillion.
