Govt. borrowing higher by 103% in FY12 – Alfalah Securities Limited

Karachi, July 23, 2012 (PPI-OT): The government borrowing has increased by 103% to around PKR 1.198 trillion by the end of FY12 to meet the budget deficit as against PKR 590 billion last year.

According to Alfalah Securities Limited, higher expenditures and relatively low revenue collection has led to higher fiscal borrowing which is an alarming situation for the stability of the Pakistan’s economy. The State Bank of Pakistan (SBP) had maintained a tight monetary policy despite positive real rates to discourage higher borrowing but these efforts ended in vain. Moreover, as per SBP (Amendment) Act (2012), the government borrowing from the SBP was required to be repaid at the end of each quarter and the existing stock was to be retired within eight years.