Islamabad: The debt of the Government of Pakistan increased by 34.1 percent year-on-year to Rs 58.6 lakh crore at the end of April. This information was given in the recently released report of the country’s central bank. According to a news published in the newspaper Dawn on Tuesday, the loan increased by 2.6 percent on a monthly basis. According to the news, at the end of April, the domestic debt is Rs 36.5 lakh crore (62.3 percent) while the external debt is Rs 22 lakh crore (37.6 percent).
According to the State Bank of Pakistan (SBP) data, the year-on-year increase in external debt stood at 49.1 percent. The external debt had the same figure a month ago. The largest share of domestic debt is held by the federal government, which accounts for about Rs 25 lakh crore of debt.
The other major contributors to household debt are short-term loans (Rs 7.2 lakh crore) and unfunded loans (Rs 2.9 lakh crore), which also include borrowings from national savings schemes. The stock holdings of the federal government increased by 31.6 percent from the previous year, while the share of short-term debt increased by 29.4 percent. Pakistan has been grappling with a balance of payments crisis for a long time. The foreign exchange reserves have just enough to pay for one month’s imports.
On the other hand, interest rates have climbed to an unprecedented level amid record-high inflation. In view of this, repaying domestic debt is becoming a big challenge for the country. Facing a huge political and economic crisis, Pakistan is grappling with huge external debt, weak local currency, and dwindling foreign exchange reserves. According to the country’s statistics bureau, the inflation level rose by an annual 36.4 percent in April mainly due to a rise in food prices. It is the highest in South Asia.