Sunday Feb 07, 2021
ISLAMABAD: The PTI government has admitted to failing to achieve key fiscal deficit and public debt targets for Pakistan, with certain crucial figures omitted from the main debt policy statement and the regime citing coronavirus as a reason behind its inability to meet the goals.
According to The News, the finance ministry underlined that the federal fiscal deficit, excluding grants, was recorded at Rs3.60 trillion — 8.6% — of GDP during financial year 2019-20 and, thus, remained higher than the threshold prescribed in the Fiscal Responsibility and Debt Limitation Act, 2005.
In its report submitted before the Parliament in its recent session, the PTI regime conceded that it failed to achieve its target of slashing the public debt-to-GDP ratio to 84%; it rose to 87.2% instead after the coronavirus outbreak. Its prudent economic policies, it claimed, projected a decline in the ratio over the next few years but economists rejected it, saying it was only the government's wish.
Given the low GDP growth and higher fiscal deficit, economists opined it would be hard for the PTI regime to achieve a reduction in the public debt-to-GDP ratio.
Total public debt shot up by Rs3.69 trillion, coming in at Rs36.40 trillion, as of June 2020 end. Total debt and liabilities were recorded at Rs44.8 trillion, as of September 2020 compared to Rs29 trillion on June 2018 — numbers the finance ministry deliberately hid from the main debt policy statement and that were not mentioned in its report to the Parliament.
Total external debt and liabilities stood at $113.8 billion on September 30, 2020, according to State Bank of Pakistan.
The policy statement had conceded that the debt-per-capita shot to a whopping Rs175,000 per each Pakistani citizen, while domestic debt and stocks, external debt, and external public debt totalled Rs23.38 trillion, $78 billion, and $79.9 billion, respectively.
Outstanding guarantees — which were registered at Rs2.344 trillion and Rs1.969 trillion on June 30, 2020 and 2019, respectively — stood at Rs2.343 trillion as of Sept 2020.
The volume of new guarantees issued during a financial year is also limited under Fiscal Responsibility and Debt Limitation Act at 2% of the GDP. The PTI regime issued new guarantees, including rollovers, worth Rs0.342 trillion (0.8% of the GDP) during financial year 2019-20.
With regard to the federal fiscal deficit, the government tried to explain to the Parliament that the coronavirus pandemic pushed the situation out of control but that this departure was temporary and that it had taken a number of steps to reverse the trend.