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Government violates FRDL Act

The government has violated the 60 percent GDP limit set by Fiscal Responsibility and Debt Limitation (FRDL) Act 2005, with debt reaching at 61.3 percent of GDP due to massive borrowings, official documents available with Business Recorder revealed. In fiscal year 2012, total debt rose to Rs 12661 billion with local currency debt of Rs 7636 billion and foreign currency debt of Rs 5025 billion.

Domestic debt constitutes 37 percent of GDP and foreign currency debt 24.3 percent of GDP. In percentage terms domestic currency as a percentage of total debt rose from 54.2 percent in 2007 to 60.3 percent in 2012. Foreign currency debt as a percentage of total debt peaked in 2009 at 49.5 percent and declined to 39.7 in 2012.

The borrowing of the present government has doubled the country's debt during the last four years. The total public debt was Rs 6044 billion during fiscal year 2008 when the Pakistan People's Party (PPP) led coalition government took over after the general elections which has now increased to Rs 12661 billion due to sustained heavy borrowings from the domestic and external sources. The presentation also revealed that the Finance Ministry has admitted that major growth in exports has come from price effect and a small portion from value increase which adverse the terms of trade.

Senior officials further stated that pressure on imports could re-emerge with rising POL and could impact the trade balance adversely. The stagnation in foreign Direct Investment (FDI) is a cause of serious concern for the economic team because of its serious ramification on external account. The country is relaying on auction of 3G license and pursuing the US for early reimbursement of remaining amount of Coalition Support Fund (CSF) to support the external account. The disbursement of external inflows has been very poor as only $296.2 million were received during the first two months of the current fiscal year against the estimated $3.738 billion for the current fiscal. The $255 million was disbursed against project aid including earthquake, $10 million against Kerry-Lugar, $14.7 million for flood relief and $14.8 million against Tokyo FoDP.

Copyright Business Recorder, 2012



 



 
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ICT 2014


Annual2013/14
Foreign Debt $61.805bn
Per Cap Income $1,386
GDP Growth 4.14%
Average CPI 8.6%
MonthlyOctober
Trade Balance $-2.309 bln
Exports $1.957 bln
Imports $4.266 bln
WeeklyDecember 15, 2014
Reserves $13.922 bln