Caretaker govt borrows record Rs4 trillion loans in just six months

Prime minister Anwar-ul-Haq Kakar-led caretaker government has borrowed a record Rs4 trillion loans from banks in just six months of the current fiscal year 2023-24 (August-February).

The borrowed amount already surpassed the total loans acquired by the previous PDM-led government during FY23.

Between July and January of FY24, the government borrowed Rs3.99 trillion, compared to the same period last year (Rs1.398 trillion), marking a staggering 185% hike, according to the data shared by the State Bank of Pakistan (SBP).

According to sources, the Ministry of Finance said that the average inflation of over 28pc in the seven months of this fiscal year helped the government generate more revenues. 

However, they were forced to borrow heavily as inflation also significantly increased government spending.

Experts and analysts described the government's borrowing as 'too expensive' because the returns are 21%, and this rate has stayed consistent during the fiscal year FY24.

The fragile economy faces a daunting challenge with recent heavy loans, requiring over 50% of the budget for debt servicing.

Banks have reaped substantial benefits from the government's extensive borrowings, with most doubling their profits in 2023.