Finance: Caught between hopes and fears

In just over three months of this fiscal year (between July 1 and October 6), the federal government’s borrowings from banks almost tripled to Rs1.835 trillion from Rs628 billion in the same period last year. Funds borrowed from banks are being used chiefly for debt servicing but also for meeting the high cost of running the day-to-day affairs of the government. Current bank borrowing of the government continues to add to the total stock of the government’s domestic and external debts that are together projected to exceed 72 per cent of GDP by the end of the current fiscal year in June. Such a high level is bound to keep fiscal resources under pressure for several years to come. No sustainable solution to this perennial problem is in sight. But if the creditor countries agree to provide Pakistan and other indebted countries with some debt relief, our external debt servicing worries may be reduced, providing us with some space to handle domestic debt more effectively.