KARACHI: The Ministry of Finance (MoF) has informed Sindh High Court (SHC) on Friday that Section 3(4) of Fiscal Responsibility and Debt Limitation Act, 2005 allows the government to depart from the fiscal and debt limits on the grounds of unforeseen demands on the finances of the government, so exceeding the limit of 60 percent to GDP is neither illegal nor unlawful.
The MoF told the court when its representative submitted a report on behalf of Secretary Finance on a petition, filed by Barrister Ali Tahir, who prayed the court to declare increase in public debt to gross domestic product over 60% illegal and unlawful. The federal government through Finance Secretary, the SBP and Debt Policy Coordination Office has been made respondents in the petition.
The MoF stated that the report contained complete details on debt statistics as well as debt-to-GDP ratio along with reasons for its increase, the ministry stated that the government only approves to take on additional debt when it feels that it is an absolute necessity and the available financial resources are not sufficient to provide for the ongoing expenditure, adding that this requirement is part of the annual budget and is approved by the parliament, and all government functionaries are obligated to execute the budget as per letter of law.
The ministry told the court the reasons behind the departure from debt-to-GDP over 60% are specified and reported to the National Assembly every year along with potential remedial measures to return to debt reduction path, therefore there is no violation of section 3(4) of FRDL Act.
In addition, since Section 3(4) of Fiscal Responsibility and Debt Limitation Act, 2005 allows the government to depart from the fiscal and debt limits on grounds of unforeseen demands on the finances of the government as determined by the National Assembly, therefore, exceeding the limit of 60% debt-to-GDP is neither illegal nor unlawful, the ministry stated and pleaded the court to dismiss the petition.
The court fixed October 7, 2021 for hearing of final arguments on the petition.
Copyright Business Recorder, 2021
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