ISLAMABAD, Oct 27: The government on Monday introduced in the National Assembly the Fiscal Responsibility and Debt Limitation Bill 2003 to make it binding on the government to bring down revenue deficit to zero by June 30, 2008, and maintain a revenue surplus thereafter.
Briefing reporters here on Wednesday about the bill, Finance Minister Shaukat Aziz said the economic managers of the country will be made answerable to parliament in case of any deviation from the set targets.
Transparency about public spending and borrowings will be ensured through comprehensive public disclosures, he said.
Under the law, a target has been set to reduce public debt to 60 per cent of GDP by the year 2013 and to keep cutting it by 2.5 per cent in subsequent years. He said the government guarantees to the public-sector entities would not amount to more than two per cent of GDP.
The minister said few countries in the developing world had taken such an initiative to control public expenditure.
He said deviations from the targeted expenditure could only be made in case of unforeseen demands on the finances of the government resulting from either a national security situation or a national calamity as determined by the National Assembly.
However, the finance minister would have to specify the reasons to the assembly for making such a departure.
The government would be responsible to file three statements every year to the National Assembly, namely, the medium-term budgetary statement along with a three-year rolling target, the fiscal policy statement and the debt policy statement.
In the fiscal policy statement, the government would be required to submit key macro-economic indicators like total expenditure, total revenue, total fiscal deficit, revenue deficit and total public debt.
In the debt policy statement, the government would explain the set targets concerning debt strategy and say if these had been met, and if not, for what reasons.
The government would also submit the analysis of the foreign currency exposure of Pakistan’s external debt along with evaluations of the cost of external and domestic debts.
The government would also be required to inform the National Assembly about any major economic decision which it might have introduced during the year but the minister said there was no definition of the major decision.
Under section 8 of the bill which deals with disclosure of policy decisions, the finance minister would not be bound to disclose information which he felt would prejudice the substantial economic interest of Pakistan, or the security or defence of Pakistan or its international relations. Information which might compromise the federal government in a material way in negotiations, litigation or commercial activity or which may result in material loss of value to the federal government, would also be not disclosed.
Both the minister and secretary of finance would give an undertaking about the authenticity of the information and data provided to parliament.
If the government continuously fails to meet the target of debt to GDP ratio specified for any reason for two years, the government shall take all necessary measures including the curtailment of the sums authorized to be paid and applied from and out of the federal consolidated fund to return to the debt reduction path by the end of the next two fiscal years.
He said the government would be required to establish a debt policy coordination office comprising two non-government members and a director general who would work directly under the finance minister.
Asked as to why the provision relating to cut in the salaries of related officials in case of non-compliance with the set targets had been eliminated from the bill, the minister said that loss to the national interest or objectives could not be protected through salary cuts. He, however, said that no other punishment had been envisaged in the law which could be improved in the days ahead.
