Debt servicing surges by 64pc due to high interest rate in first half of fiscal year
Higher interest rates have led to a 64 percent increase in the total debt servicing bill in the first half of the current fiscal year, resulting in a deficit in the net revenue receipts of the federal government.
With major expenditures, including defence, pensions, salaries, the functioning of the civil government, development, subsidies, grants to provinces, and others, the federal government has no choice but to secure loans from domestic and foreign sources to finance its expanding budget deficit.
According to the fiscal operations released by the finance ministry on Monday, the overall budget deficit ballooned to Rs1.812 trillion, equivalent to 2.3 percent of the gross domestic product (GDP) in the first six months (July-Dec) of the current fiscal year. This is compared to Rs1.68 trillion, or two percent of GDP, in the same period of the last financial year. The overall fiscal deficit had reached Rs6.5 trillion, equivalent to 7.7 percent of GDP, for the last financial year.
