Govt to hire experts in Debt Office after PM’s approval

ISLAMABAD: At a time when Pakistan’s public debt has crossed Rs17 trillion mark, the government is going to inform the International Monetary Fund (IMF) team that the Debt Office would be strengthened by hiring experts with MP scales after getting approval of Prime Minister Nawaz Sharif.
Interestingly, in the aftermath of enactment of Fiscal Responsibility and Debt Limitation Act (FRDLA) 2005 approved by the Parliament, no rules of business were devised to run the office of Debt Policy Coordination Office (DPCO) under the aegis of the Ministry of Finance during last 10 years.
Now the rules of business are under preparation in consultation with the Ministry of Finance and Establishment Division. The government plans to hire two directors, senior economists, researchers and supporting staff in the range of 15 to 20 persons. So far the Debt Office was largely ignored since its inception as it was not run on professional lines. The public debt is now touching new heights with domestic debt of Rs11.2 trillion and external debt Rs5.9 trillion (including IMF loan) till end December 2014.
“The newly appointed Director General of DPCO Ehtisham Rashid has been currently visiting Dubai to inform the IMF’s review mission about placing mechanism to strengthen the Debt Office in a bid to meet structural benchmark placed by the IMF till March 2015 under $6.67 billion bailout package for Pakistan,” official sources told The News.
Under structural benchmark criteria, Pakistani side issued an order on consolidating debt management functions but it fell short of what had been envisaged under the IMF program. The government had appointed a director to the DPCO.
Pakistani authorities argue that efforts are underway to diversify financing from both domestic and external sources. They have lengthened the maturity profile of domestic debt and improved the balance between domestic and external debt by placing sovereign bonds for $2 billion.
The government approved an administrative order on September 30, 2014 (structural benchmark) to strengthen the DPCO. While the order, for administrative difficulties, did not unify debt management functions.
Through strengthening of DPCO, the government will begin to provide IMF staff with a detailed quarterly financing plan for the coming 12 months and extend the existing in-quarter issuance plan to a rolling quarterly issuance programme published every month for domestic public securities, taking steps to strengthen risk management and strategy functions by reorganising the DPCO as a middle office responsible for updating the debt strategy and monitoring its implementation, coordinating the credit risk management functions by end-March 2015 under structural benchmark, market risk management functions by end-December 2015, and operational risk management functions by end-December 2016.
The government recruited a DG to lead the DPCO and build capacity by hiring and/or training additional staff with the help of international partners; and will take steps to strengthen front office management of debt issuance both in domestic and external markets by arranging a formal linkage with the DPCO and executing and communicating the borrowing auctions with the SBP being the agent, and strengthening the primary dealership system.