KARACHI, July 13: The government wants to bring down Pakistan’s debt stock to 90.5 per cent of the GDP in the current fiscal year from 94.5 per cent in the outgoing fiscal, the secretary general of Finance Ministry Moeen Afzal said on Saturday.

Addressing a post-budget seminar of the Management Association of Pakistan Moeen Afzal said that Pakistan’s debt stock was 103 per cent of the GDP a year earlier which the government has managed to bring down in the last fiscal year after obtaining concessions from the Paris Club and steps taken as a part of debt strategy.

“Debt stocks should be 60 per cent of the GDP,” he informed the gathering of business executives and professionals, which is, he said, an acceptable level of loan liabilities of a government of a developing country.

He strongly defended the cut up to 2.5 per cent in rates of National Saving Schemes (NSS) in the current year’s budget, which he pointed out, was a part of debt reduction strategy. He justified the new low rates of the NSS on the ground that inflation rate is also down in the country and the savers do not suffer much loss.

Narrowing down of budgetary deficit, reduction in debt-GDP ratio and other allied steps should lead to improvement in the overall saving rates rather than a fall as being apprehended in certain quarters because of slash in NSS rates, he asserted.

He said that Pakistan suffered quite a few financial jolts and setback during the decade of nineties which created balance of payment problems. He mentioned Gulf war and nuclear explosions and the resultant sanctions that followed many factors that caused serious balance of payment problems. Adding to these woes were ambitious projects like the yellow cab scheme, the Motorway and Convention hall on which substantial amount of foreign exchange was wasted without any income generation.

The Secretary General was visibly embarrassed when told that the budget deficit in the outgoing fiscal year 2001-02 has far exceeded the target set by the government and went beyond 7 per cent.

He attributed this yawning budgetary gap to the ‘one time’ expenditure on account of plugging KESC losses, financial impact of drought and a rise in defence because of the peculiar situation.

Mr. Moeen said that after financial restructuring, the government is now all set to privatize the KESC in next six months. The Wapda, he said, would remain with the government for sometime but a restructuring and corporatization is under way in that giant organization.

He also spoke of the new Income Tax Ordinance in the country, which has addressed many issues of the taxpayers. He, however, conceded that there were certain technical issues, which are being looked into.

On social sector spending he said that all transactions are being made transparent and the State Bank is maintaining the account. He said social sectors schemes are being funded from the grants and concessional loans from developed countries and agencies.

Mr Sidat Ebrahim in his presentation analyzed the various provisions of the new Income Tax Ordinance in depth and detail and highlighted both the positive and negative aspects.

He wondered as to what was mid exchange value with regard to foreign currency transactions because he understood there are spot rates and demand rates.