The caretaker government is borrowing money like crazy and creating massive debt without taking care of the existing debt burden on the country.
Quoting the latest government borrowing data from the State Bank of Pakistan, CEO of Alpha Beta Core Securities, Khurram Schehzad said that the state borrowing from local banks in the last six months reached a new high.
Govt borrowing from local banks reached Rs. 3.12 trillion (between July 1 to Dec 23) against Rs. 1.05 trillion borrowed in the same period last year. This is a whopping 197% increase compared to last year!” he said.
He said borrowing from local banks in just six months (under the Caretaker Government’s setup) crossed Rs. 3.1 trillion versus Rs. 3.64 trillion borrowed in the entire last year. “This means the caretaker government has already taken the amount of debt that the last government took in its entire year,” he said.
Here is the yearly comparison of government borrowing just from local banks in the last 3 years:
At this pace in FY24, government borrowing just from local banks may end up crossing easily over Rs 6.0 trillion (65% YoY), the highest in a single year in history, and already a record for a caretaker setup, pushing the country further into the debt trap.
“Government borrowing at such a fast pace within 6 months is even more surprising when tax collections so far are beating targets (overburdening the economy, industry, and individuals with huge amounts of excessive taxes without broadening the tax net), yet govt borrowings are breaching all previous records,” Khurram said.
He added that this will continue to cause inflation and potentially lead to the weakening of local currency (resulting in more inflation), while adding more and more debt burden on the economy, leading to more taxes (for debt repayment) thereby compromising on investment and growth potential of the country.
