Punjab government loans increase 5% in second quarter – Pakistan

LAHORE: In the second quarter of this year, the outstanding debt of the Punjab government, both local and external, rose from Rs 908 billion to Rs 955 billion, with an increase of 5% (Rs 46.8 billion ).

According to a report released by the Punjab’s Ministry of Finance for the period April 1 to June 30, domestic lending fell from Rs.5.579 billion to Rs 5.192 billion while foreign lending fell from Rs 902.105 billion to Rs 949.335. billion rupees.

Citing the reason for the increase in loans, the report observed that this growth is mainly due to the exchange loss of Rs 31 billion realized during the last three months (April-June). “In addition, the amount of new net debt received during the quarter under review amounts to Rs 15.8 billion. The total amount of the loan recorded during the fiscal year 2020-21 amounts to approximately Rs 14.7 billion ”, he added.

The outstanding debt as of June 30, 2021 excludes the amount of guarantees given to various projects / entities of the government of Punjab; The domestic borrowing limit granted by the National Economic Council (NEC) in Punjab is used to provide such guarantees. The total amount of outstanding guarantees remains unchanged from March 31, which amounted to Rs 48.75 billion.

The report also pointed out that the commodity finance debt stock of Rs 548 billion (as of June 30) is not included in the Rs 955 billion debt stock above. The financing of raw materials is based on the security of wheat stocks and the guarantee of the federal government. The amount of wheat stock available to the government is around Rs. 205 billion (as of June 30); the repayment of this loan as well as the incidental costs (including the mark-up) are made from the proceeds of the sale of the purchased wheat stock. The provincial government subsidizes the difference between the purchase cost and the selling price.

A significant portion of government borrowing comes from the International Development Association (IBA) which accounts for 33 percent of the total outstanding (Rs 317,079 million) followed by the Asian Development Bank (ABD) 25 percent (Rs 236 346 million), China 23 percent (Rs 220,837 million), International Bank for Reconstruction and Development (IBRD) 14 percent (Rs 132,490 million), Japan International Cooperation Agency (JICA) 3 percent (Rs 26,140 million), International Fund for Agricultural Development (IFAD) 1 percent (Rs 12,526 million), Federal government 1% (Rs 5,192 million), France 0.4% (Rs 3,811 million) and the Islamic Development Bank (IDB) 0.01% (Rs 106 million).

The report says the agriculture and livestock sector remained the main beneficiary of government borrowing, which stands at Rs 267,026 million (28 percent of total outstanding), followed by transport. and communications Rs 224,889 million (24 percent), education Rs 209,965 million (22%), urban and community development Rs 113,156 million (12%), governance Rs 57,199 million (6%) ), health Rs 44,626 million (5%), energy Rs 16,982 million (2%), industries and infrastructure Rs 16,386 million (2%), tourism Rs 2,593 million (0.3%) and the environment Rs 1,705 million (0.2%).

Copyright Business Recorder, 2021

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