ISLAMABAD: Finance Minister Ishaq Dar has said that public debt has been brought down from 64 percent to 62 percent of the Gross Domestic Product (GDP) in less than two years and by June 2016, it will be brought down to 60 percent as required under the law. “Later, the public debt will be brought down to less than 57 percent of the GDP.”
The GDP is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis.
A well-placed source in the Finance Ministry told this scribe that Dar, while briefing the meeting of the Council of Common Interests (CCI) on the current state of public debt and supervision policy, observed that due to stringent measures adopted by the ministry regarding imposition of public debt and supervision policy the country was better than it was in the past, as it stood on the verge of a momentous transformation.
The Finance Ministry intends to take GDP growth gradually to around 7 percent, keep inflation to less than 8 percent, bring fiscal deficit down to 4 percent, take foreign exchange reserves to $20 billion, raise investment-to-GDP ratio to 22 percent, industrial sector growth to 8 percent, increase tax-to-GDP ratio to 15 percent, increase exports to $32 billion, increase foreign direct investment to $5.5 billion, set spending on education and health at around 4 percent of GDP, with key social indicators equal or better than regional countries, poverty alleviation and support to vulnerable sections of society.
Moreover, the ministry wants to reduce load shedding of electricity, and meet shortage of natural gas by enhanced supplies through increased exploration/production.
The government debt known as public debt, national debt and sovereign debt is the debt owed by a central government. The government debt may also refer to the debt of a state or provincial, municipal or local government. By contrast, the annual government deficit refers to the difference between government receipts and spending in a single year, that is, the increase of debt over a particular year.
Pakistan recorded a government debt-to-GDP of 63.30% of the country’s GDP during the previous fiscal year. Government debt-to-GDP in Pakistan was averaged at 69.94% from 1994 until 2013, reaching an all time high of 87.90 percent in 2001 and a record low of 54.90 percent in 2007.
The Finance Ministry has a long-term development plan aimed at creating a globally competitive and prosperous country with particular emphasis on achieving macroeconomic stability through inclusive growth and it aims to achieve growth of around 7 percent.
This is necessary to address poverty incidence and unemployment while improving socio-economic indicators, including health and education. It is also working to improve the energy mix to avoid the need for tariff increase and to attract foreign direct investment. The Finance Ministry is also pursuing a well-planned comprehensive strategy to shift expensive debt into a cheaper debt in order to reduce the overall public liabilities.
