Rs28.8tr debt spending bill tabled

Express Tribune

3 hours ago

The government on Monday laid a Rs28.8 trillion compulsory expenses bill before the National Assembly for the next fiscal year, which is about 17% lower than this year due to a reduction in interest rates, but key state organs received double-digit increases in their budgets.
The Presidency, the Supreme Court of Pakistan, the Senate, the Federal Ombudsman Secretariat for Protection against Harassment of Women at the Workplace, and the Federal Tax Ombudsman would get substantially higher budgets for the fiscal year 2025–26 compared to this year, according to the charged expenditure statement.
Finance Minister Muhammad Aurangzeb laid before the National Assembly a compulsory expenditure bill of Rs28.8 trillion to meet the expenses on debt servicing and the requirements of the President of Pakistan, Supreme Court of Pakistan, the National Assembly, the Senate, and other state organs.
Under the Constitution, these expenses are considered charged expenditures on which the National Assembly does not have the right to vote. The details show that while the cost of debt has reduced due to falling interest rates, the state organs still received significantly higher budgets, except for the National Assembly.
Around Rs1 trillion has been sought to meet the obligatory expenditures of the National Assembly, the Senate, the Election Commission of Pakistan, the Supreme Court of Pakistan, the President of Pakistan, the Islamabad High Court, the Federal Tax Ombudsman, Pakistan Post Office, Federal Ombudsman Secretariat for Protection against Harassment of Women, and the Foreign Office.
An amount of Rs27.8 trillion has been sought for Pakistan's debt repayment requirements and interest costs, according to a summary of the spending bill presented by the government before the National Assembly, seeking its endorsement.
The financing needs for repaying maturing debt, interest costs, and funding the next fiscal year's budget deficit have reduced after the central bank cut the interest rates from 22% to 11%, providing some relief to the government and taxpayers.
The government's preference to borrow through long-term debt instruments has also helped reduce domestic debt repayments for the next fiscal year. However, the foreign debt repayments have significantly increased, particularly the short-term debt.
The Pakistani government does not repay principal loans from its budget but instead contracts more debt to repay maturing loans. This is also a reason why debt-related expenditures are significantly higher compared to the Rs17.6 trillion size of the next fiscal year's budget.
The amount of Rs27.8 trillion sought for the repayment of principal loans and debt servicing is lower by Rs5.9 trillion, or 17.5%, compared to the original budget approved for such expenses in June last year, according to the documents.
This is the second consecutive fiscal year where the cost of borrowings and repayments is lower than the preceding year.
Except for the Rs8.2 trillion cost of interest on debt, which will be part of the federal budget, the rest of the amount will not be booked in the budget and will be directly borrowed from domestic and foreign markets to repay loans obtained in the past by successive governments.
Interest payments on domestic and foreign loans will consume roughly 47% of the proposed budget of Rs17.6 trillion for the next fiscal year. This is also lower than in the outgoing fiscal year.
Compared to the original borrowing plan of Rs19 trillion for the outgoing fiscal year, the government has sought the Assembly's endorsement for Rs14 trillion to repay maturing domestic debt in the next fiscal year. This amount is lower by Rs5 trillion or 26% compared to the original allocation for this fiscal year.
The government has also requested Rs8.2 trillion for domestic debt servicing, which is 17% or Rs1.5 trillion less than the outgoing fiscal year.
To repay foreign loans, the government has sought a record Rs5.4 trillion for the new fiscal year, which will be obtained from foreign lenders. The need for foreign loan repayment is up by 11%, or Rs547 billion.
The government has requested an additional Rs1 trillion to pay interest on foreign loans, which is almost at this year's level. It has asked for Rs200 billion from the National Assembly to repay short-term foreign loans, which is up by 577% or Rs177 billion.
There has also been some reduction in the expenses of the National Assembly, as its budget has been reduced by Rs400 million to Rs6.9 billion for the next fiscal year. The Senate, however, received a 19% jump, and its expenses would increase to a record Rs6.2 billion in the next fiscal year.
For the staff, household, and allowances of the President, the government has requested a record Rs2.7 billion budget, which is 17% or Rs400 million higher than the outgoing fiscal year.
It seems that the country's elite ruling class does not care about the deteriorating economic conditions, which will keep Pakistan under the thumb of the International Monetary Fund for times to come.
The government has requested Rs6.6 billion for charged expenditures of the Supreme Court of Pakistan, which is higher by Rs2.2 billion, or 51%. The Islamabad High Court will receive Rs2.2 billion, higher by Rs280 million, or 15%.
The Election Commission of Pakistan will get Rs9.9 billion in the next fiscal year. The Wafaqi Mohtasib will receive Rs1.6 billion. An amount of Rs604 million has been given to the Federal Tax Ombudsman.