Business News

ISLAMABAD, Sep 23 (APP): The Spokesman of the Finance Division
Saturday categorically rejected a report carried by a section of
press, “Dar’s Legacy: a heavily-indebted Pakistan” saying during
last four years the national economy witnessed tremendous growth.
In a statement, the spokesman said that in the past four years
of the present government had seen tremendous economic growth
whereby the size of the economy grew from USD 225 billion in 2013 to
USD 304 billion in 2017 thus constituting an aggregate growth of 35
percent during the said period.
This was only made possible by the prudent policies of the
government that included historically low domestic interest rates,
a prolonged and sustained period of low inflation and price
stability, significant surge in private sector credit, huge increase
in PSDP spending and above all an effective monetary policy coupled
with a judicious fiscal policy that saw the budget deficit come down
from 8.2 % in 2013 to 5.8% in 2017.
Despite all these positive developments, some detractors
habitually cherry pick the selective numbers and present them in
isolation without giving the reader a proper perspective and a
complete picture of the economy.
The news report said that Pakistan’s total debt and
liabilities increased to Rs 25.1 trillion. It further stated that
total external debt and liabilities has increased to roughly $83
billion by end of fiscal year 2016-17 and a sum of $8.2 billion was
spent on external debt servicing. The report unduly criticized the
changes made in Fiscal Responsibility and Debt Limitation Act, 2005.
According to the spokesman, the report portrayed a negative
picture of the economy by analyzing the debt in isolation and
completely ignoring positive developments witnessed during the past
few years.
The spokesman clarified that firstly, the writer has used
exaggerated numbers which create doubts and mislead the general
public.
The debt burden is better understood in comparison to its relation with the GDP instead of absolute debt numbers, he added.
Another way to gauge the increase in public debt burden of the
country is to compare that with relevant global debt statistics. In
this regard, Pakistan witnessed a marginal increase of 1.4 percent
(from 60.2 percent in 2013 to 61.6 percent in 2017) in its total
debt to GDP ratio during last four years while during the same
period, global debt to GDP ratio increased by about 8 percent
(Source IMF World Economic Outlook).
Similarly, external public debt stood at US$ 62.5 billion
while news report showed total external debt and liabilities number
amounting US$ 82.7 billion at end June 2017 to sensationalize the
issue.
The rationale of using external public debt instead of
external debt and liabilities has been clarified at many forums, he
maintained.
Total External Debt and Liabilities include the debt of other
sectors (private sector, bank borrowing)which are not part of public
debt since the government is not liable to pay these
obligations.
The spokesman said the external public debt increased from US$
48.1 billion to US$ 62.5 billion i.e. by US$ 14.4 billion while non-
public debt rose by US$ 7.3 billion. Therefore, it is incorrect to
assume that debt per capita is Rs.120,381.
He said the news report made a false claim that the government
has made amendments in the Fiscal Responsibility and Debt Limitation
(FRDL) Act, 2005 to conceal the worsening debt picture. In fact,
most of the clauses of FRDL Act were outdated and the present
government not only updated the clauses in accordance with the
present economic realities but also defined path with an objective
to improve the fiscal and debt situation of the country along with
formalizing the definition of public debt.
It is important to note that these amendments were made
regardless of the tenure of any political government to clearly
define a debt reduction path.
Accordingly, the gross public debt numbers are consistent and
unchanged as reported in the government publications in the past.
Further, the total debt numbers are consistent with
international reporting standards i.e. “IMF Public Sector Debt
Statistics Guide for Compilers and Users (2013)”.