ZAHEER ABBASI & NAVEED BUTT
ISLAMABAD: Federal Minister for Finance, Dr Shamshad Akhtar Wednesday acknowledged that Pakistan’s debt has increased to 72 percent of the GDP, higher by 12 percent to the limit of 60 percent of the GDP set in FRDL Act.
Pakistan Fiscal Responsibility and Debt Limitation Act (FRDL) 2005 set the limit of debt to GDP ratio at 60 percent and Shamshad Akhtar while speaking at seminar on ‘Public Debt Issues Challenges and Way Forward,’ organized by Planning Commission, stated that the country’s debt is projected to touch 74 percent of the GDP by the end of current fiscal year.
The finance minister who is also holding the portfolio of Ministry of Planning, Development and Reform termed weak and irresponsible economic management responsible for growth in total debt and liabilities to Rs 24.5 trillion on May 2018 with domestic debt at Rs 16.5 trillion and foreign component Rs 8 trillion.
Pakistan’s external debt and liabilities, according to caretaker finance minister, are $92.2 billion with $69.5 billion external public debt and liabilities.
The minister said that failure to mobilize domestic resources increased reliance on borrowing and accumulation of domestic and external debt and created difficult situation for the government to come as meeting debt obligations will be the biggest challenge for them.
She suggested that an effective, sensible and high powered economic management will be prerequisite in the next government to deal with the economic challenges.
The minister said that fiscal deficit has gone from sustainable level to unsustainable level and there is need to increase domestic resources to keep the public debt at manageable level.
The new government will be required to develop fiscal consolidation path to decrease the fiscal deficit to 4 percent of the GDP and then 3.5 percent by end-fiscal year 2020. She also pointed out that managing interest rate will be very complicated for the new government due to difficult international interest rate environment.
The minister said, “Pakistan will be in a very difficult international environment, which will increase interest rate on foreign borrowing and hype in global interest rate will compel increase in domestic interest rate.”
The minister said that the next government will have to focus on developing exports as $25 billion exports with current level of imports are not sustainable and are primary cause of current account deficit. She also underlined the need to increase investment to GDP ratio for higher growth but wanted this to be done by increasing domestic resources to afford higher expenditure and not through borrowing.
Earlier, speaking at the conference of Sustainable Development Goals (SDGs), she said that country is facing micro-economic challenges in the form of fiscal deficit, which was above the target while the external current account deficit was also high.
She said the tax amnesty scheme had helped the government in realizing Rs 89 billion and added that this indicates the quantum of revenue potential out of the tax loop.
The minister was of the view that at a time when Pakistan is going through some macroeconomic challenges, it is not an easy job to finance resources for SDGs and urged the donors not to deduct consultancy fee and other charges.
She said partnership with development agencies, academia, research institutions, local and provincial governments and corporate sector is imperative for achieving the goals. She said NGOs and corporate sector can play a significant role in sustainable progress towards implementation of SDGs.
She said the literacy rate in the country is also low and role the local bodies and politicians can be very helpful to achieve SDGs goals.
Minister PD&R Dr Shamshad Akhtar was guest of honor while secretary planning gave the welcome address to the worthy guests. Neil Buhne, Resident Coordinator United Nations, and Zafarul Hassan, Chief SDGs MoPD&R, also discoursed the salient features of SDGs and its implementation in Pakistan.
Addressing the conference, Secretary Planning Shoaib Ahmed Siddiqui reiterated Pakistan’s strong commitment for the implementation of SDGs agenda. He said that SDGs are integrated with the country’s national development agenda and are among top three priorities of the minister for planning. “We also want to engage the private sector and NGOs for SDGs’ agenda implementation,” he said.
Later, the provincial SDGs Support Units also presented their progress in localizing Agenda 2030 across the country, emphasizing the need for partnerships among all stakeholders.
