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April 8, 2021

By end FY2021: Pak general gross debt to hit 87.7pc of GDP, says IMF

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April 8, 2021

ISLAMABAD: The IMF has projected that Pakistan’s general government gross debt would peak to 87.7 percent of Gross Domestic Product (GDP) by end of the ongoing financial year 2021.

The IMF’s Fiscal Monitor released on Wednesday disclosed that Pakistan’s net present value of pension spending would witness upsurge by 11 percent of GDP over the next 30 years from FY2020 to FY2050.

This indicates that the pension bill has been ballooning at supersonic speed leaving no other option but to introduce reforms to avoid ballooning of this liability.

The health care spending change over the next 10 years from FY2020 to FY2030 will witness the change of just 0.1 percent of GDP. The net present value of healthcare spending over 30 years from 2020 to 2050 will witness a surge by 2.7 percent of GDP.

Pakistan’s gross financing needs would be standing at 35.9 percent of GDP in the current fiscal year and average term of maturity of debt stood at 2.5 years period. According to Fiscal Monitor, released by the IMF on Wednesday night, showing that the general government gross debt stood at 87.2 percent of GDP for FY2020 and would go up to 87.7 percent of GDP by end of FY2021.

The Fund also projected that the general government’s gross debt was projected to decline from next fiscal year FY2022 when it might recede to 83.3 percent of GDP for coming financial year. It would be standing at 77.7 percent of GDP for FY2023, 73.6 percent for FY2024, 69.5 percent of GDP for FY2025 and 65.5 percent of GDP for FY2026.

The IMF’s Fiscal Monitor showed that Pakistan’s net general debt would peak to 80.7 percent of GDP for FY2021 as it stood at 79.6 percent of GDP in last FY2020.

The general government net debt would start declining from FY2022 as it would recede to 77.3 percent of GDP for next fiscal year FY2022, 72.4 percent of GDP for FY2023 and 68.8 percent for FY2024.

The IMF has projected the general government balance (a budget deficit) at 7.1 percent of GDP for the current fiscal year against 8 percent of GDP for the last financial year. The general government primary balance has been projected at negative 1 percent of GDP for the current fiscal year against 1.7 percent for last financial year.