Government borrowing reaches record high to Rs1.7tr in 7MFY23

February 09, 2023 (MLN): The government's borrowing has reached a record high of Rs1.778 trillion during the first seven months of the current fiscal year, marking a significant increase compared to the same period last year, the recent data revealed by the State Bank showed.

 Meanwhile, credit from the private sector has almost halved to just Rs435 billion, which suggests a decrease in investor confidence.

The increase in government borrowing highlights the growing pressure on the nation's finances as it tries to balance its budget and support a struggling economy while the decline in private sector credit also signals a decrease in investor confidence, as businesses and individuals are becoming hesitant to lend money to the government.

"The government's growing dependence on borrowing is concerning, as it highlights the need for increased revenue and reduced spending," said a financial analyst. "The declining credit from the private sector is also a worrying sign, indicating a decrease in investor confidence and a need for the government to regain the trust of businesses and individuals."

The government has to find ways to reduce its dependence on borrowing and increase revenue in order to get its finances back on track and regain the trust of investors.

This could involve implementing reforms to increase tax collection, reducing government spending, and finding new sources of revenue.

The country is already facing a number of challenges these days, including inflation, a declining currency, and soaring debt. The government has been working to address these issues but has struggled to get its finances back on track and regain the trust of investors.

The recent surge in government borrowing and decline in private sector credit highlight the urgency of these efforts."

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