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May 29, 2018
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PML-N-govt’s 5-year performance: Inflation down from 7.75pc to 3.77, says PM

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May 29, 2018

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ISLAMABAD: Projecting the PML-N-led federal government’s five-year economic performance, Prime Minister Shahid Khaqan Abbasi Monday claimed that the country’s external debt in percentage of GDP was lower than it was five years ago.

Experts however term his statement “factually wrong”. The premier also said he had approved honorariums equal to three basic salaries for all the federal government employees to bring uniformity, unlike the previous practice when selected people would get the honorarium.

However, the final decision to this effect was expected on Tuesday (today) when Ministry of Finance would be presenting a summary before the Economic Coordination Committee (ECC) of the Cabinet.

“As percentage of the Gross Domestic Product (GDP), Pakistan’s external debt was 20.5% by end fiscal year 2016-17, which was lower than 21.4% recorded in the last year of the PPP government,” Abbasi claimed during a press briefing here.

Abbasi has presented figure of debt of last fiscal year despite the fact that the latest figures of debt from all aspects were available up to March 31, 2018 indicating that the total external debt and liabilities were standing in the range of 30.8 percent of GDP.

The prime minister said the total debt of the government stood at 61.4% of the GDP or Rs21.4 trillion. However, the SBP data shows that the total debt [of the government] stood at Rs24 trillion, equivalent to 70% of the GDP by end March 2018.

In June 2013, the government’s public debt was equal to 60.4% of the GDP or Rs14.3 trillion. Finance Minister Dr Miftah Ismail claimed that Rs8 trillion additional debt was incurred during past five years to pay for provinces shares under the federal divisible pool and for infrastructure development. However, the provinces’ shares are not paid by taking debt, as their share is given from the federal tax collection.

The average growth rate, he said, stood at 3.68 percent in FY2013 which increased to 5.79 percent by 2018. Total size of the economy increased from $231 billion to $313 billion in last five years.

All major contributors for growth had performed well including industrial growth, agriculture and services in last five years. The CPI based inflation stood at 7.75 percent in FY2013 which has now dropped to 3.77 percent in FY2018.

The foreign exchange reserves were standing at $11.62 billion in FY 2013 which were now hovering around $16.23 billion in FY 2018. The FBR’s tax collection has doubled in last five years.

The prime minister also said that delay in case of offshore assets by the Supreme Court was creating uncertainty and the people were waiting for the court verdict before availing the tax amnesty scheme. The government has announced the tax amnesty scheme for domestic and offshore assets but so far the response remains lukewarm.

The prime minister also said that intervention by the judiciary and NAB in executive affairs had made it difficult to run the government efficiently.

Answering a query, the prime minister said he had approved honorariums equal to three basic salaries for all the federal government employees to bring uniformity, unlike the previous practice when selected people would get the honorarium.

However, the Ministry of Finance is reluctant to implement the decision, arguing that it would cost minimum Rs100 billion.

Without naming principle secretary to PM Fawad H Fawad who signed the letter on PM’s behalf, the finance minister said that it looked that the officer signed the letter when he was fasting and was unable to comprehend the original summary’s content.

The finance minister said that his ministry had sent the summary for giving honorariums up to six basis salaries to the employees of Finance Ministry, FBR, Planning Division, Board of Investment etc.

When contacted, renowned economist Dr Ashfaque Hassan Khan for seeking his viewpoint on reduction in external debt in percentage of GDP, he said there was gross misconception because Ishaq Dar inflated growth figures wrongly so the picture of the economy was distorted.

He said Japan’s public debt to GDP ratio was ranging 250 percent as against 70 percent in case of Pakistan because Japan’s Foreign Exchange Reserves (FER) were standing around $1.3 trillion as opposed to $10.3 billion being claimed by State Bank of Pakistan.

He said after taking into account forward liabilities the actual reserves held by SBP stood at $4 billion. “We are going to face difficulties to repay our obligations,” he concluded.

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