KARACHI, Jan 31: The Governor, State Bank of Pakistan (SBP), Dr. Ishrat Husain, said on Friday that the government would be able to reduce the debt servicing ratio to below 25 per cent during 2004-05, from the current 40 per cent.

Speaking as chief guest and key note speaker at a dialogue on “Pakistan - Economic Horizons, 2003 and Beyond,” jointly organized by the Daily Times and Union Bank at a hotel here, Dr. Ishrat Husain said the government has been able to repay $4.5 billion costly commercial loans to donors.

“Our top priority is to get country out of the debt trap,” he remarked.

All this is achieved through good governance, good polices and management, he said. He said the 9/11 incident also played a role in improvement of the situation.

The SBP chief said after reducing the debt servicing ratio, the government would be able to spend more on social services, adding that development expenditure which has been increased from Rs100 billion a year ago to Rs130 billion this year would be enhanced to Rs185 billion by 2004-05.

“We will be able to spend money on the basic necessities of human development,” he said adding which are education, health, water supply, roads, irrigation, storage of water, agriculture and farm to market roads.

He hoped that this year the growth rate would be achieved at 4.5 per cent, next year it would be between 5 to 5.5 per cent and by 2004-05 it would be 6 per cent.

Dr. Ishrat said three years ago two-third of the budget had gone to debt servicing and there was no space left for development expenditures and the credibility of the country was very low, which has been restored now.

“Today we have credibility with our donor agencies,” he said adding that despite difficulties the government has been able to pay back all the due costly commercial loans.

“We are committed to pay back all the commercial loans to IMF, World Bank and Asian Development Bank,” he added.

He hoped the government revenue would be increased to Rs560 billion in 2004-05 from the present Rs460 billion. The revenues were Rs300 billion three years ago, he added.—APP