Senate panel flags concerns over rising debt burden

ISLAMABAD: The Senate Standing Committee on Finance and Revenue on Tuesday expressed serious concern over the country’s rising debt burden while reviewing a proposed amendment aimed at strengthening the Debt Management Office (DMO) through enhanced resources and institutional capacity.

Budget for 2026-27 is expected in the first week of June, Minister of State for Finance Bilal Azhar Kayani said in an informal talk here on Tuesday.

“We should review whether there is even a need for the Debt Office or not, as the debt graph has increased massively,” members of the committee observed during deliberations on the proposed changes.

Kayani defended the move, saying there was a pressing need for capacity upgradation of the Debt Management Office to ensure effective planning and execution of the government’s debt management functions.

He informed the committee that, against an allocation of Rs9.7 trillion for debt servicing in the last fiscal year, the actual expenditure remained at Rs8.9 trillion, resulting in savings of Rs800 billion.

For the outgoing fiscal year, the government has earmarked Rs8.2 trillion for debt servicing and is expecting a significant decline in the overall servicing cost due to a reduction in interest rates and retirement of a portion of public debt, the minister added.

The Committee considered and unanimously recommended “The Fiscal Responsibility and Debt Limitation (Amendment) Bill, 2026 for passage by the Senate. Furthermore, the Committee recommended that the appointment of the Director General (Debt) be made on a priority basis.

The committee, however, maintained reservations over the pace of debt accumulation and stressed the need for stronger oversight and prudent fiscal management to contain the mounting debt burden.

The Committee met under the chairmanship of Senator Saleem Mandviwalla. The meeting was attended by Senator Muhammad Talha Mahmood and Senator Muhammad Abdul Qadir.

The Committee took up discussion on the Government Bill titled “The Export-Import Bank of Pakistan (Amendment) Bill, 2026.” The panel was briefed on the functions and organizational structure of Pakistan Export-Import Bank and was informed that the institution is a state-owned entity. The Committee was further apprised of the composition of the Board of Directors and the procedure for the appointment of the Chief Executive Officer (CEO). It was informed that the Board would comprise two government nominees, while the remaining members would be drawn from the private sector.

The committee was further informed that the Bill introduces a new definition, including ex officio and independent director, and removes obsolete provisions to ensure conceptual clarity. The act explicitly incorporates the applicability of the SOE Act and establishes its overriding effect, subject to limited exceptions relating to the appointment and powers of the President and certain operational provisions. After detailed deliberations and discussion, the bill was unanimously recommended by the Committee for passage by the Senate.

During the meeting, the Chairman expressed serious concern over delays in the appointment of Board Members and Chief Executive Officers in various public sector entities. He emphasized the need for formulating an effective policy framework to prevent such delays, which adversely affect the performance and efficiency of institutions.

The Committee also sought comprehensive details regarding vacant positions of Board Members and CEOs in various departments and organizations, along with the dates on which these positions became vacant. The Committee also sought details of how long the Deputy Governor, State Bank of Pakistan (SBP), position was vacant.

Another bill titled “The Netting of Financial Arrangements Bill, 2026” was also discussed during the meeting. Representatives of the State Bank of Pakistan briefed the Committee on the advantages of the netting facility in ensuring the smooth flow of transactions and efficiency within financial markets. After discussion, the Committee deferred consideration of the bill and directed that representatives from the Pakistan Banks Association, Pakistan Stock Exchange, Federal Board of Revenue, and Securities and Exchange Commission of Pakistan be invited to the next meeting for further deliberations.—TAHIR AMIN