ISLAMABAD: Despite a rise in absolute figures of debt burden, the PTI government has made preparations for presenting the midyear review before the parliament on economic indicators with projected...
ISLAMABAD: Despite a rise in absolute figures of debt burden, the PTI government has made preparations for presenting the midyear review before the parliament on economic indicators with projected decline in public and publicly-guaranteed debt by 2 percent of GDP.
“We expect that the total public debt and publicly guaranteed debt in percentage of GDP would decline from 89 to 87 percent of GDP till June 2020 in line with the definition of the IMF,” top official sources confirmed to The News here on Tuesday.
The government is all set to table the midyear review before the parliament by end of the ongoing month. “Keeping in view higher inflationary pressures, the debt-to-GDP ratio is going to witness a declining trend by the end of the current fiscal year on June 30, 2020," said one topofficial of the Finance Division.
The Ministry of Finance has sought official data from all concerned ministries/departments and different wings in order to prepare a comprehensive midyear review report. Under the Pakistan Financial Management (PFM) law approved by the parliament, the government is bound to present the midyear review in order to allow the policymakers for making required correction on the economic front.
According to the latest official data, Pakistan’s External Debt and Liabilities (EDL) have risen to $111.047 billion till December 2019 as it went up by $15.8 billion (Rs2,441 billion) during the 18-month rule under the PTI led regime since June 2018. Pakistan’s EDL ballooned to $111.047 billion till December 31, 2019 against $95.237 billion on June 30, 2018, indicating that the total EDL went up by $15.8 billion in the last 18 months from June 2018 to Dec 31, 2019.
In the last one year, the EDL has gone up from $99.041 billion on Dec 2018 to $111.047 billion till Dec 31, 2019, showing an increase by $11.637 billion in 12 months period. The country’s overall public debt and liabilities have gone up to Rs 41 trillion (Rs 40.993 trillion exactly) till December 31, 2019 against Rs33.229 trillion in the corresponding year of Dec 2018. It indicates that the total debt and liabilities increased by Rs7.764 trillion in 12 months period from Dec 2018 to Dec 2019 period.
With the level of total debt and liabilities piling up to Rs41 trillion, the country’s debt to GDP ratio clinched to 94.1 percent of the GDP in Dec 2019 against 86.2 percent of GDP on December 31, 2018.
There is another controversy over the definition of total public debt as the State Bank of Pakistan included all public debt and liabilities, including IMF loan for balance of payment support that is obtained on books of the SBP, loans obtained by PSEs and private sector obligations. However, the Ministry of Finance did not recognise liabilities as part of the public debt. The Ministry of Finance, Economic Affairs Division and SBP should sit together to come up with one definition acceptable to all parties concerned and in line with the IMF standards, so that there should be one yardstick to analyse the total public debt and liabilities instead of choosing different numbers according to the choice of analyst to show increased or decreased figure.