Senate body urges steps for minimising debt to 50 percent of GDP

The Senate Standing Committee on Finance, Revenue and Economic Affairs on Wednesday recommended the government to adhere to the "Fiscal Responsibility and Debt Limitation Act" and take steps to minimize/reduce debt to 50 percent of GDP, as it is reaching the limit that would not be payable for the coming generation.
The parliamentary panel met with Farooq Hamid Naek in the chair to consider and finalize the recommendations on the Finance Bill, 2018. The committee further asked the Centre to adhere to the implementation of reduction in public debt through devising a roadmap and double allocation for Federally Administered Tribal Areas (FATA) in the budget 2018-19.
Senator Mushtaq Ahmad presented recommendation on behalf of Senator Siraj-ul-Haq, saying that the government should give a timeframe for payment of domestic and foreign debts in the budget 2018-19 and make an announcement that no loan would be obtained in future. Special Secretary Ministry of Finance Noor Ahmed said that loans are being taken due to compelling situations; however, parliamentarians could guide them in right direction. The committee observed that amendments were made in the debt act, but instead of reducing the debt limit from 60 percent of GDP it goes up to 70 percent which is a matter of great concern. The debt act was not implemented in true spirit.
On the proposal of increasing salary and pension up to 30 percent, Special Secretary Finance Noor Ahmed said that the real impact of 10 percent increase in pension would have in the range of 12 percent as the government increased pay and pension in accordance with available fiscal space.
The Senate panel had invited former Senator Anwar Binder and former Secretary Finance Dr Waqar Masood for getting technical advice for preparation of budget recommendations. Dr Waqar Masood told the committee that the Parliament amended FRDLA by envisaging bringing the public debt to GDP ratio at 50 percent in 15 years period. Ch Anwar Binder said that the rising debt burden has become the major issue and the outgoing PML (N) led regime has obtained more loan than got by all governments since Independence. "The debt burden has risen to such a level that our coming generations will not be able to pay back these loans," he added. The committee finalized recommendation that the government should adhere to implementation of FRDLA and devise a roadmap to achieve the desired objectives.
Mushtaq Ahmad further recommended that the government should construct small dams in the provinces to give them a relief and the funds allocated for Water and Power Division be increased by three times and cheap electricity should be provided to the masses. The committee refereed the matter to the planning and development committee.
Ahmad further recommended that a 30% increase should be made instead of 10% in the pension of the old age pensioners. The minimum pension should be Rs 25, 000, Rs 15, 000 and Rs 10, 000 for pensioners of 70 years and above, low-income group and family respectively.
The orphans, widows, poor women, youth and farmers should be provided interest-free loans. The limit of waiving HBFC loans for widows be increased from Rs 600, 000 to Rs 1, 000,000. However, Finance Ministry responded that relief has been given as per the available space.
Senator Mohsin Aziz said that there is figure-fudging and misstatement in the budget documents. He said that there is no clarity about the circular debt which has crossed Rs 1 trillion mark, textile package and refunds claims as well as internet. Senator Ayesha Raza Farooq confronted Aziz while saying that allegations were not correct.
Ahmad proposed that amount of Rs 40 billion should be allocated for FATA instead of Rs 24.5 billion. An amount of Rs 1000 billion be allocated for development in FATA and other tribal areas to bring them in the national mainstream and eradicate sense of deprivation therein. The committee recommended for increase the allocation for FATA two folds, besides devising a long term plan for FATA.
Ahmad recommended that national economy should be purged of interest (riba) and effective legislation should be made in this regard. Minister of State for Finance Rana Afzal said that Islamic banking is being promoted in the country. The committee referred the matter to Federal Shariat Court.