Govt Relied on Local Debt Market to Finance its Loans

Federal Government relied mainly on the domestic debt market to finance its deficit i.e. 67 percent of the Federal fiscal deficit was financed through domestic debt during July-December ( 2020-21), according to the debt bulletin issued by the Ministry of Finance on Thursday. According to the public debt bulletin, within domestic sources, all of the additional funding was mobilized through long-term government securities, whereas net reduction was witnessed in short-term debt. Within external sources, multilateral and bilateral sources remained the main contributor in the financing of the federal fiscal deficit. Ministry of Finance highlighted that external debt was recorded at US$ 82.4 billion at end-December 2020. Although borrowing from commercial sources has relatively increased during the last few years, multilateral and bilateral sources still cumulatively constitute 82 percent of the external public debt portfolio as of the end of December 2020, Public Debt Bulletin maintained. Highlights of Borrowing Operations during 6-Months of FY 2020-21: Pakistan is availing the G-20 Debt Service Suspension Initiative (DSSI) for a period of 14-Month (May 2020 – June 2021) which will help to reduce the debt servicing impact to the tune of around US$ 2.4 billion during this period.