UK government borrowing dropped in June with easing lockdown measures boosting the economy, official data showed Wednesday.

Public sector net borrowing slid to £22.8 billion ($31 billion, 26.4 billion euros) last month, the Office for National Statistics (ONS) said in a statement.

Although down £5.5 billion compared with June 2020 when the UK was in a strict lockdown, the latest number was still the second highest June level on record.

A sizeable amount of the government's borrowing since the start of the pandemic has gone on a furlough scheme to pay the bulk of wages for millions of private sector workers.

"I'm proud of the unprecedented package of support we put in place to protect jobs and help thousands of businesses survive the pandemic, and that we are continuing to support those who need it," finance minister Rishi Sunak said following Wednesday's data.

<a href="https://www.wionews.com/world/never-seen-this-before-britain-france-spain-witness-surge-in-covid-19-cases-399293">Also read |&nbsp;'Never seen this before': Britain, France &amp; Spain witness surge in COVID-19 cases&nbsp;</a>

"However, it's also right that we ensure debt remains under control."

An influential think tank on Wednesday warned that while government borrowing was set to come in lower than expected for the UK fiscal year to March 2022, Chancellor of the Exchequer Sunak was unlikely to be able to embark on a post-pandemic spending splurge.

"Permanent economic damage done by the pandemic and rising debt interest costs mean that... the chancellor has little, if any, additional headroom," the Institute for Fiscal Studies said in a report.

Economists reckon on interest rates rising sooner than expected as the reopening of economies pushes up inflation.

At the same time, the highly-transmissible Delta variant of the coronavirus is sweeping the globe and forcing some countries to reimpose restrictions.

But in England, the bulk of lockdown measures were lifted on Monday. Tougher restrictions remain across the rest of the UK.

UK government borrowing dropped in June with easing lockdown measures boosting the economy, official data showed Wednesday. Public sector net borrowing slid to £22.

UK government borrowing dropped in June with easing lockdown measures boosting the economy, official data showed Wednesday. Public sector net borrowing slid to £22.8 billion ($31 billion, 26.4 billion euros) last month, the Office for National Statistics (ONS) said in a statement. Although down £5.5 billion compared with June 2020 when the UK was in a strict lockdown, the latest number was still the second highest June level on record. A sizeable amount of the government's borrowing since the start of the pandemic has gone on a furlough scheme to pay the bulk of wages for millions of private sector workers. "I'm proud of the unprecedented package of support we put in place to protect jobs and help thousands of businesses survive the pandemic, and that we are continuing to support those who need it," finance minister Rishi Sunak said following Wednesday's data. Also read | 'Never seen this before': Britain, France & Spain witness surge in COVID-19 cases "However, it's also right that we ensure debt remains under control." An influential think tank on Wednesday warned that while government borrowing was set to come in lower than expected for the UK fiscal year to March 2022, Chancellor of the Exchequer Sunak was unlikely to be able to embark on a post-pandemic spending splurge. "Permanent economic damage done by the pandemic and rising debt interest costs mean that... the chancellor has little, if any, additional headroom," the Institute for Fiscal Studies said in a report. Economists reckon on interest rates rising sooner than expected as the reopening of economies pushes up inflation. At the same time, the highly-transmissible Delta variant of the coronavirus is sweeping the globe and forcing some countries to reimpose restrictions. But in England, the bulk of lockdown measures were lifted on Monday. Tougher restrictions remain across the rest of the UK.

UK borrowing drops as lockdowns ease, reveals data

The chief of India&#39;s central bank on Wednesday warned the federal government that not wresting a ballooning fiscal deficit might cause long-term economic damage.

Reserve Bank of India governor Urjit Patel said not reducing the high borrowing levels was also hampering the country&#39;s sovereign ratings.

Patel, speaking at an investors&#39; summit in India&#39;s western Gujarat state, said both the federal government and state governments had to &quot;take cognisance&quot; of the matter to &quot;mitigate financial volatility&quot; in near future.

India&#39;s total fiscal deficit is targeted at 6.4 per cent of GDP in 2016-17, which is above the norm for most emerging markets and G20 countries. In comparison, China&#39;s government deficit was a little above two percentage points in 2016.

Patel&#39;s comments come weeks before the Narendra Modi administration is set to announce its annual budget.&nbsp;

The high debt burden has also scuttled India&#39;s chance of upgrading credit rating. Recently, Reuters had reported that the Indian government had pushed Moody&#39;s to get a better rating from its existing Baa3 rating -- the lowest investment grade.

But the international credit rating agency remained unmoved, with&nbsp;the company&#39;s senior vice president and sovereign analyst&nbsp;Marie Diron reasoning that high debt levels and the saddled banking sector&nbsp;were key reasons for the status quo.

(WION with inputs from Reuters)

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India's total fiscal deficit is targeted at 6.4 per cent of GDP in 2016-17, which is higher than most G20 countries

The chief of India's central bank on Wednesday warned the federal government that not wresting a ballooning fiscal deficit might cause long-term economic damage. Reserve Bank of India governor Urjit Patel said not reducing the high borrowing levels was also hampering the country's sovereign ratings. Patel, speaking at an investors' summit in India's western Gujarat state, said both the federal government and state governments had to "take cognisance" of the matter to "mitigate financial volatility" in near future. India's total fiscal deficit is targeted at 6.4 per cent of GDP in 2016-17, which is above the norm for most emerging markets and G20 countries. In comparison, China's government deficit was a little above two percentage points in 2016. Patel's comments come weeks before the Narendra Modi administration is set to announce its annual budget. The high debt burden has also scuttled India's chance of upgrading credit rating. Recently, Reuters had reported that the Indian government had pushed Moody's to get a better rating from its existing Baa3 rating -- the lowest investment grade. But the international credit rating agency remained unmoved, with the company's senior vice president and sovereign analyst Marie Diron reasoning that high debt levels and the saddled banking sector were key reasons for the status quo. (WION with inputs from Reuters)

Reduce borrowing levels to avoid economic volatility, warns RBI

In what may be viewed as an attempt to keep its &#39;sacred revenue&#39; &nbsp;untouched, the Pakistan government is mulling over setting up a &lsquo;new&rsquo; company to borrow about Rs200 billion from banks and return taxpayers&rsquo; refunds it has got over the years, the Express Tribune reported on Thursday.&nbsp; 
 
The report says that the government discussed on Wednesday about creating a Special Purpose Vehicle (SPV) under the federal board of revenue to raise debt outside the federal budget at an interest rate equivalent to Karachi Interbank Offered Rate (KIBOR) plus at least 1 per cent to pay back refunds.&nbsp; 
 
However, the report further says that the move is likely to face resistance from the International Monetary Fund (IMF) and therefore, the government will formally announce the new setup after the expiry of the IMF programme, ending on September 30.&nbsp; 
 
&quot;Over the last three years, the federal government has blocked taxpayers&rsquo; refunds to artificially inflate tax revenues in order to meet IMF targets. Although the exact amount of taxpayers refunds remains unclear, the finance minister had at one point put the figure at Rs221 billion,&quot; &nbsp;the report says.&nbsp; 
 
According to sources, instead of deducting this amount from the tax collection pool, the government has decided to borrow from banks at higher interest rates. &nbsp;&quot;For the time being, the government may pay the tax refunds of the exporters out of the collection pool, said the sources,&quot; &nbsp;the report reads.&nbsp; 
 
(WION)

The government intends to return taxpayers' refunds it has accumulated over the last three years. The move may be opposed by IMF

In what may be viewed as an attempt to keep its 'sacred revenue' untouched, the Pakistan government is mulling over setting up a ‘new’ company to borrow about Rs200 billion from banks and return taxpayers’ refunds it has got over the years, the Express Tribune reported on Thursday. The report says that the government discussed on Wednesday about creating a Special Purpose Vehicle (SPV) under the federal board of revenue to raise debt outside the federal budget at an interest rate equivalent to Karachi Interbank Offered Rate (KIBOR) plus at least 1 per cent to pay back refunds. However, the report further says that the move is likely to face resistance from the International Monetary Fund (IMF) and therefore, the government will formally announce the new setup after the expiry of the IMF programme, ending on September 30. "Over the last three years, the federal government has blocked taxpayers’ refunds to artificially inflate tax revenues in order to meet IMF targets. Although the exact amount of taxpayers refunds remains unclear, the finance minister had at one point put the figure at Rs221 billion," the report says. According to sources, instead of deducting this amount from the tax collection pool, the government has decided to borrow from banks at higher interest rates. "For the time being, the government may pay the tax refunds of the exporters out of the collection pool, said the sources," the report reads. (WION)

Pakistan may set up new 'company' to borrow Rs 200 billion

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