ISLAMABAD, Sept 18: The government has decided to reduce over Rs1.8 trillion outstanding public debt to below Rs1 trillion by 2012 and eliminate around Rs125 billion revenue deficit by 2007 through “Fiscal Responsibility and Debt Limitation Bill 2003”.

Cabinet sources told Dawn on Thursday that the federal cabinet would meet on September 24 to approve the bill for submission to the parliament during the ongoing National Assembly session.

The cabinet meeting, to be presided over by Prime Minister Zafarullah Khan Jamali, would approve two bills for introduction in the Parliament. These include National Development Finance Corporation (Repeal) Bill 2003 and Fiscal Responsibility and Debt Limitation Bill 2003.

The cabinet would also discuss Protected Areas Management Project with special reference to Hingol National Park, and Tameer-e-Pakistan Programme for 2003-04 and beyond.

The cabinet would also approve Ratification of Agreement on Cooperation in Science and Technology between Pakistan and the US signed by President Pervez Musharraf during his visit to Washington earlier this year.

The draft fiscal responsibility and debt limitation ordinance 2003 was cleared in principle by the cabinet in June this year but was sent back to the law ministry for vetting and modifications. Under commitment with the IMF, the law had to be enacted through the parliament by August 31, 2002 but could not be implemented.

Currently, the outstanding public debt is over 100 per cent of GDP (Rs1.8 trillion) which has to be brought down to below Rs1 trillion or 60 per cent of GDP by 2012.

A provision in the original draft that envisaged suspending the salaries of the cabinet members in case of overspending by the government beyond a certain limit has been done away with in the final bill, an official said.

The bill seeks to reduce the outstanding public debt by at least 2.5 per cent of the GDP every year while ensuring that social and poverty related expenditures remain unaffected and did not fall below four per cent of the GDP.

It also requires the government not to issue guarantees, including those on rupee borrowing by public sector enterprises, quantifies minimum rate of return, output purchase agreements and other claims and commitments for any amount exceeding two per cent of the GDP.