Loan repayments to increase 81% in FY22
On Friday, the government asked the National Assembly for permission to borrow Rs.26.3 trillion in the next fiscal year to repay and repay the loans, which was 81% higher than the initial request of the previous year. and indicated the indebtedness of the country.
The amount of five claims worth Rs 26.3 trillion is greater than the total size of the 2021-2022 federal budget, which is Rs.8.5 trillion. The difference exists because the government does not budget loans taken out for the repayment of domestic and external debt. These transactions are settled outside the budget.
The demand of Rs.26.3 trillion for loan principal repayment and debt service is Rs11.7 trillion, or 81%, higher than requirements for the outgoing year under these headings, documents show. .
Finance Secretary Yousaf Khan was unavailable for comment.
The requests were filed the day the Economics Division revealed that Pakistan had secured $ 11.9 billion in gross loans in the first 11 months of the current fiscal year – on average $ 1.1 billion per month. This includes $ 3.7 billion in expensive short-term foreign commercial loans.
Finance Minister Shaukat Tarin asked the National Assembly for a total amount of Rs.26.5 trillion for imputed expenses. Authorization of an additional Rs300 billion has been requested to cover compulsory expenses of the National Assembly, Senate, Pakistan Election Commission, Supreme Court of Pakistan, President of Pakistan, High Court of Islamabad, Federal and Tax Mediators and Ministry of Foreign Affairs.
The Rs 26.5 trillion loan is constitutionally charged expenditure and the National Assembly does not have the right to veto such expenditure. The role of the lower house of parliament is limited to authorization alone.
With the exception of the 3 06 trillion rupees of interest on the debt which will form part of the federal budget, the remainder of the amount will not be counted in the budget and will be directly borrowed on the national and foreign markets to repay the obtained loans. in the past by previous and current governments.
Interest payments on domestic and foreign loans will consume about 36% of the proposed budget of 8.5 trillion rupees for the next fiscal year.
Against the initial borrowing plan of Rs.10.1 trillion for the outgoing fiscal year, the government asked the National Assembly for approval of Rs.21.6 trillion for the repayment of domestic debt maturing during the year. of the next fiscal year. The amount is 113% or Rs11.5 trillion more than the outgoing fiscal year.
He suggests that loans obtained through Pakistan Treasury bills and investment bonds mature this year, which the government will refinance instead of repaying.
Prime Minister Imran Khan has pledged that one of the milestones of his success in government would be reducing total debt and liabilities to Rs 20 trillion from Rs 30 trillion left by the League government. Pakistani Muslim-Nawaz (PML-N). However, the debt pile of 30 trillion rupees has already swelled to 45 trillion rupees.
The government has also requested 2.8 trillion rupees for domestic debt service, 4.8 percent or 127 billion rupees more than the outgoing fiscal year.
To repay foreign loans, the government has requested 1.4 trillion rupees for the new fiscal year, which will be obtained from foreign lenders. The repayment requirement for foreign loans is up 16% or Rs199 billion.
The government has asked for an additional 302 billion rupees to pay the interest on foreign loans, which is 13 billion rupees lower due to the refinancing of G20 debt.
The government demanded 74.4 billion rupees from the National Assembly to repay short-term foreign loans, down 59% or 109 billion rupees.
By the end of the current fiscal year, the public debt-to-GDP ratio is expected to drop to 83%, which is better than the previous fiscal year. But the government is legally bound to limit the debt to less than 60% of GDP and each successive government has violated this legal limit.
Other expenses charged
For the president’s staff, housekeeping and allowances, the government asked the National Assembly for 1.02 billion rupees, 2.8% more than the outgoing fiscal year.
The National Assembly and the Senate will obtain an increase in their allocations compared to the initial budget for this year. The government demanded 2.4 billion rupees from the National Assembly, up 140 million rupees or 6%. The Senate will receive 2.2 billion rupees, an increase of 199 million rupees or 10%.
The government has requested 2.8 billion rupees for expenses charged to the Supreme Court, which is 400 million rupees or 17% higher.
For expenses charged to the High Court in Islamabad, a claim for 1.1 billion rupees was filed with the National Assembly, higher by 386 million rupees or 55%. Pakistan’s Election Commission will receive 3.8 billion rupees, a 3.3% increase from this year.
Posted in The Express Tribune, June 26e, 2021.