ISLAMABAD, July 11: Minister for Finance and Planning Dr Shamshad Akhtar Wednesday said debt was a reality for growing economies and Pakistan was no exception which had to pursue its high growth ambitions to expand its infrastructure and to invest in the social uplift of the country.
“Public debt should not be measured in isolation as it is governed under Fiscal Responsibility and Debt Limitation Act (FRDLA), 2005 and according to this Act, public debt has to be reduced to 60 percent by 2017-18 and thereafter a 15-year transition has been set towards a debt-to-GDP ratio of 50 percent,” she said while addressing a seminar on ‘Public Debt – Issues, Challenges and Way Forward’.
Shamshad Akhtar commended Ministry of Planning, Development and Reform for taking this initiative to provide real picture of the public debt and remove the misconceptions being spread in the public debates and media.
The minister said the Public debt witnessed average annual growth of 11.3% during FY 2013 to May 2018.
She informed that public debt mainly increased due to fiscal deficit, IMF loan, balance of payments requirements and rupee depreciation against the dollar.
She said around 33 percent of total public debt is denominated in foreign currencies with an average life of around 8 years.
The minister further said during the last five years, several structural changes were witnessed in the composition of external public debt with increased share of commercial borrowing however, there is a need to reduce reliance on this source of financing.
The minister suggested that government has to emphasise on obtaining concessional and long-term external financing to avoid higher debt servicing and putting in place fiscal consolidation measures by reducing fiscal deficit to below 4 percent as mentioned in Fiscal Responsibility and Debt Limitation Act (FRDLA), 2005 and reducing the public debt to GDP ratio to 50 percent through increasing tax revenue and expenditure management. Secretary Planning Shoaib Ahmed Siddiqui while giving his welcome remarks maintained that it was very encouraging and appreciable to see that the economic stakeholders had gathered under one roof to discuss the upcoming challenges and way forward.
He noted that the policy makers in the government were quite aware to redefine debt dynamics through innovative product structure such as issuance of floating rate debt which attracts market participation.
He said the government was also devising strategy to enhance its exports sector through stimulating business community, public private partnership and adopting innovating approach.