Home » Business » Liabilities, debt service rise to Rs1 trillion

Liabilities, debt service rise to Rs1 trillion

As economy is crying under immense burden of debt-servicing, the State Bank’s data revealed on Friday that total debt and liabilities services crossed over one trillion rupees in the fiscal year 2009-10, and Rs305 billion were paid in the first quarter of the current fiscal year.

currency pakistanThe massive debt-servicing which included principal amount (about 40 per cent) was clearly a huge burden on economy which could hardly generate targeted revenue of Rs1.6 trillion in 2010-11.

The country had to pay Rs660 billion as interest on debt while it paid Rs391.8 billion as principal amount.

Out of Rs660 billion, the government had to pay Rs577.7 billion as interest payment for domestic debt while external debt service amounted to Rs83 billion. The interest payment of liabilities amounted to Rs17.6 billion which shows that most of revenue goes to debt-servicing.

The State Bank’s calculation further showed that total debt and liabilities servicing was 7.3 per cent of the GDP.

In the first quarter of the current fiscal year (September-2010), total debt and liabilities services increased by 27 per cent to Rs305 billion.

It may be shocking for country’s economic managers and economy watchers that total debt and liabilities of the country have
gone up to 73.3 per cent of the GDP till September 2010 (provisional figures).

The external debt and liabilities constituted 34.4 per cent of the GDP while government’s domestic debt was 33.8 per cent of the GDP.

The country, which has been facing acute problem of inflation for last four years, spent most of the revenue generated by economy on debt-servicing.

This outflow of resources creates serious shortage of revenue and thus causes widening of fiscal deficit going beyond control and beyond the target given by the International Monetary Fund (IMF). IMF is the largest lender to Pakistan as it has been providing $11.3 billion under the Standby Agreement.

Experts say this fiscal gap is filled by printing of notes which further accelerates inflation.

The State Bank in its first quarterly report this week stated that the economy could grow in the range of 2-3 per cent this year which means revenue would see a further fall.

Experts predict large increase in oil prices in the coming weeks for which government would have to improve its liquidity.

The government is borrowing from State Bank and commercial banks at a record pace which would accumulate stocks of debt, resulting in higher debt servicing in future.

Like this story?

More News on EPakistanNews.com

Pakistan News update 24 hours, latest breaking news updates in Pakistan, Pak news, Pakistan Urdu columns, latest news pakistan, political news updates, E Pakistan Newspaper, Karachi News, Karachi Updates, Lahore news, Islamabad news, Multan news and more breaking news, E Pakistan News brings Latest Pakistan News, headline news, pk politics, News online, sports, politics news from Pakistan.

Home - Disclaimer - Follow us on Twitter - Like us on Facebook

Copyright © 2010-2015, E Pakistan News, All rights are reserved.
This material may not be published, broadcast, rewritten or redistributed without permission are strongly prohibited.
if you need any further assistance please contact us via email epn@epakistannews.com