Amidst the economic crisis, Pakistan has spent Pakistani Rupee (Rs) 2.2 trillion as interest on debt and defence from July-November this year. The interest amount is more than the total net income of the government, which led to severe crisis in managing other expenses for the government.
During the first five months of the current fiscal year, the interest cost faced an alarming increase of 83% in the interest cost of the Rs 50 trillion federal govt debt stocks. In the total amount, the finance ministry paid Rs 1.7 trillion in interest cost.
Further, Pak govt has spent Rs 517 billion in five months on defence in this fiscal year. The amount has hiked by Rs. 112 billion or nearly 28 per cent as compared to last year, as per The Express Tribune’s reports.
The country is still unable to find a way out of the debt trap due to spending all of its net earnings on just two areas, and the security situation in the nation is only making matters worse.
According to The Express Tribune, the likelihood of a sovereign default is quite high in the absence of an International Monetary Fund (IMF) safety net and significant cash infusions from bilateral creditors.
Only Rs 119 billion was spent on development in comparison to the enormous Rs 2.2 trillion spent on debt repayment and defence. More money is spent on debt and defence than this.
Compared to the prior fiscal year, development spending was Rs 133 billion, or 53% less.
According to a report in The Express Tribune, the government would fall short of the yearly primary budget deficit objective due to unchecked expenditure on debt servicing and significant slippages against the annual circular debt reduction plan.
Due to unchecked debt servicing spending, the federal budget deficit increased to nearly Rs1.43 trillion in the first five months of the current fiscal year. This is because current expenditures increased faster than gross income.
The difference between expenditures and receipts, or the federal budget deficit, was 1.7% of the GDP.