ISLAMABAD: Minister for Finance, Planning and Development Dr Shamshad Akhtar on Wednesday favoured obtaining concessional and long-term external financing to avoid higher debt servicing, and putting in place fiscal consolidation measures to bring down fiscal deficit below 4pc to meet the requirements of Fiscal Responsibility and Debt Limitation Act (FRDLA), 2005.
“This will also enable reducing the public debt to GDP ratio to 50pc through increasing tax revenue and expenditure management,” Dr Shamshad said while speaking at a seminar on ‘Public debt – issues, challenges and way forward’.
Public debt should not be measured in isolation whereas it is governed under the FRDLA, according to which public debt has to be reduced to 60 per cent by 2017-18 and thereafter a 15-year transition has been set towards a debt-to-GDP ratio of 50pc, she said.
The minister further stated that during the last five years, several structural change were witnessed in the composition of external public debt with increased share of commercial borrowing however, there is a need to reduce reliance on this source of financing.
Public debt witnessed average annual growth of 11.3pc during fiscal years 2013 to May 2018, she added. The public debt mainly increased due to fiscal deficit, IMF loan, balance of payments requirements and rupee depreciation against the dollar. She said that around 33pc of total public debt is denominated in foreign currencies with an average life of around eight years.
Dr Shamshad reiterated that debt is a reality for growing economies. Pakistan is also a developing country and it has to pursue its high growth ambitions to expand its infrastructure and has to invest in the social uplift of the country.
Earlier, Secretary Planning Shoaib Ahmed Siddiqui said that policy makers in the government are quite aware to redefine debt dynamics through innovative product structure such as issuance of floating rate debt which attracts market participation. The government is also devising strategy to enhance its exports sector through stimulating business community, public private partnership and adopting innovating approach, he said.
‘Strategised approach needed for SDG agenda’: Meanwhile, speaking at the first national conference on SDGs, Dr Shamshad said the government will not be able to implement the Sustainable Development Goals (SDGs) agenda until a strategised and high priority approach is adopted.
The caretaker finance minister advised that the ministry of Planning and Development must pick up very critical SDGs and should sort out their needs and financing requirements. The prioritised SDGs may further be mainstreamed with the development agenda making them feasible for implementation.
Meanwhile, country’s Permanent Representative to the United Nations, Dr Maleeha Lodhi has asked the UN to inscribe Pakistan on the list of countries participating in the Voluntary National Reviews which is to take place during the 2019 High Level Political Forum on Sustainable Development in New York in July next year.
Published in Dawn, July 12th, 2018