Data clarification

This refers to the article ‘Is it working?’ (March 17) by Dr Farrukh Saleem. The Ministry of Finance believes that the article needs clarification on certain accounts. The article completely ignores the sharp reduction in the current account deficit – which was accelerating on an average of $2billion a month between April 2018 and July 2018. Soon after assuming charge, the government took corrective policy measures to arrest the widening external account gap and by February 2019 it managed to bring the deficit at $356 million (the record decline of more than 70 percent). This significant improvement will provide much-needed support to foreign exchange reserves of the country and prevent exchange rate instability.

Contrary to the figures mentioned in the article, total external debt and liabilities increased by $628 million a month (during July-December 2018) as compared to an increase of $991million a month during the same period last year. Out of this accumulation, external public debt contributed only $1.24 billion during July-December 2018 against $4.32 billion during the same period last year. Therefore, external public debt accumulation during the same period last year was around 3.5 times higher than what is recorded during the first six months of the current fiscal year.

In addition, there is a need to understand the difference between an increase in debt stock and the actual borrowing of the government. The article quoted a highly misleading number of borrowing – Rs14 billion a day – which is actually the increase in debt stock. The rupee devaluation had resulted in the significant increase in debt stock. This depreciation was mainly due to the vulnerable external account position inherited by the government. Comparing the six-month-long performance with the complete tenure of previous governments is misleading.

Finance Division

Government of Pakistan