Data released by the State Bank of Pakistan (SBP) on Monday revealed that in the first 70 days of this fiscal year (from July 1 to Sept 8), the government borrowed Rs1,600 billion, a significant increase compared to Rs261 billion borrowed during the same period last year. This means that, on average, the government borrowed over Rs22.8 billion per day to cover its expenses.
This rapid surge in borrowing highlights a concerning trend – a widening gap between revenue generation and escalating expenditures. It suggests that the government is grappling with either a severe revenue shortfall or much higher spending than initially budgeted.
Surprisingly, revenue collection during the first two months of the current fiscal year exceeded the set target. The Federal Board of Revenue collected Rs1,207 billion during July-August, surpassing the Rs1,183 billion target by Rs24 billion.
In the context of the entire fiscal year, budgetary borrowing for FY23 totaled Rs3,744 billion, up from Rs3,133 billion in FY22.
The increased government borrowing is indicative of the growing imperative for spending, exacerbated by unprecedented inflation. Research reports from brokerage house analysts indicate that inflation for September is projected to reach a staggering 30%.
Rising prices of petroleum products and energy have led to widespread inflation across the economy, placing a heavy burden on the general population and posing a serious threat to the business community, which is struggling to survive. The cost of production has soared as traders and industrialists grapple with the challenges of obtaining expensive financing, while record inflation is driving up input costs.