Bilateral partners would allow their coffers to flow to help Pakistan’s distressed economy

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Karachi: 28 September 2023: THE government has issued new debt of over Rs2.5tr during the first three months of the current financial year to finance its burgeoning fiscal deficit — the gap between its revenues and expenditures — according to new estimates of a Karachi-based brokerage firm. The new borrowing is nearly 57pc of the total debt of Rs4.4tr it had auctioned during FY23.

The issuance of additional debt underlines the government’s shrinking tax and other revenues, increased spending and growing reliance on domestic sources to fund its budgeted expenditures as external financing dries up.

External financing shrank to its seven-month low of $316m in August. Cumulatively, Islamabad secured external financing of $3.2bn in July and August, which also includes Saudi deposits of $2bn and a guaranteed loan of $508m for the PAF.

This shows that expectations that multilateral and bilateral partners would allow their coffers to flow to help Pakistan’s distressed economy, following the IMF’s nod to the Stand-by Arrangement, were very exaggerated.

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