ISLAMABAD: The Ministry of Finance Saturday said that as per stated State Bank of Pakistan (SBP) numbers the total Public Debt-to-GDP ratio had increased from 86.1 percent in June 2019 to 87.2 percent in June 2020.
Sources, however, stated that the total Debt-to-GDP ratio during the two years tenure of the present government had increased from 72.1 percent to 87.2 percent as the present government added Rs11.3 trillion to the public dent during the first two years of its tenure.
They attributed the exchange rate depreciation, interest payment as well as other reasons and to primary balance as reasons for increase in the total public debt of the country.
The finance ministry’s statement added that it was important to note that this figure had actually gone down to around 84 percent in December 2019, which was on the back of strong growth in the Federal Board of Revenue (FBR) taxes and strict control on current expenditure.
The prudent economic policies had resulted in posting of a primary surplus in February 2020, which was after a gap of many years, the ministry further maintained.
However, the Covid-29 pandemic has adversely impacted the economy and slowed down the reforms programme of the government.
Pakistan’s economy suffered from the Covid-19 outbreak through various channels such as reduction in revenue and increase in expenditures, declines in domestic and global demand, lower tourism and business travel, trade and production linkages and supply disruptions, etc.
Resultantly, the Debt-to-GDP ratio has increased due to the sharp decline in growth and the increase in the budget deficit primarily, due to Covid-19-related expenditures, during the last four months of the fiscal year 2020.
The Finance Ministry added that it was expected that the government would be able to bring back the Debt-to-GDP ratio on a clear downward path over the medium-term through increase in revenues and fiscal discipline.
The government plans to run primary surplus, maintain low and stable inflation and promote measures that support higher long-term economic growth, added the Finance Ministry.
According to the Global Economic Prospects report published by the World Bank Group in June 2020, Pakistan economy has shown greater resilience than its peer in South Asia.
Copyright Business Recorder, 2020
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