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May 3, 2018

Senate body asks Centre to bring debt at 50pc of GDP in 15 years

ISLAMABAD: The Senate Standing Committee on Finance (SSCF) has asked the Centre to adhere to the implementation of reduction in public debt to bring it at 50 per cent of the GDP in 15 years through devising a roadmap and doubled allocation for the Fata in the budget 2018-19.

In the maiden session for finalising recommendations on budget 2018-19 that will be forwarded to the National Assembly after getting endorsement from the Upper House of Parliament within 14 days, the Senate committee on finance under newly elected chairman Farooq H Naek kick-started deliberations. Recommendations presented by Senator Siraj Ul Haq were read out by Senator Mushtaq Ahmed on his behalf during the Senate panel proceedings.

Senator Mushtaq Ahmed reads out suggestion of Siraj Ul Haq in which he stated that the government should give a timeframe for payment of domestic and foreign debt in the budget 2018-19 and make an announcement that no loans will be obtained in future.

Ministry of Finance Special Secretary Noor Ahmed said that the government was left with no option but to borrow money to run the country. He asked the committee to recommend roadmap for coming out of the debt trap.

The Senate panel had invited former Senator Anwar Bhinder and former Finance Secretary Dr Waqar Masood for getting technical advice for preparation of budget recommendations. Dr Waqar Masood told the committee that Parliament amended FRDLA by envisaging bringing the public debt to the GDP ratio at 50 per cent in 15 years period. Ch Anwar Bhinder said that the rising debt burden had become the major issue, and the outgoing PML-N led regime had obtained more loan than got by all governments since independence. “The debt burden has risen to such a level that our coming generations will not be able to pay back these loans,” he added.

The committee finalised recommendation that the government should adhere to implementation of FRDLA and devise a roadmap to achieve the desired objectives.

Through amended FRDLA with approval of Parliament, the government brought definition change in the public debt after which certain liabilities excluded from the definition of debt. According to standard definition used by State Bank of Pakistan, the public debt to GDP ratio was in the range of 70.1 per cent while the Ministry of Finance insisted that it was hovering around over 62.4 per cent of the GDP.

Senator Mohsin Aziz, belonging to PTI, alleged that the figure fudging was done for budget making exercise as the government did not take into account the monster of circular debt that had now peaked to Rs01 trillion. He said that he would prove figure fudging in the committee proceedings.

Senator Ayesha Raza Farooq, belonging to the ruling PML-N, defended the government and said that no figure fudging was done by the government. The majority of recommendations were generic in nature as it was proposed to abolish the Petroleum Development Levy (PDL) which was fixed at Rs30 per liter. After discussion, the committee could not finalise its recommendation so far.

On the proposal of increasing salary and pension up to 30 per cent, Finance Special Secretary Noor Ahmed said that the real impact of 10 per cent increase in pension would have in the range of 12 per cent as the government increased pay and pension in accordance with available fiscal space.

The committee recommended doubling the allocation for Fata as it would increase from Rs24.5 billion to Rs49 billion in the budget. It was also discussed to place staggered long term plan to bring Fata on par with parts of the country.