Net debt to increase to 72.7 percent of GDP: IMF

Pakistan''s overall deficit was 21/2 percentage points of Gross Domestic Product (GDP) looser than budgeted, owing to underperforming revenues and expenditure overruns related to the political cycle. This is stated in International Monetary Fund (IMF) report "Fiscal Monitor 2019, Curbing Corruption." The report forecasts Pakistan''s budget deficit at 7.2 percent for 2019 and 8.7 percent for 2020; and projected an increase in gross government debt for Pakistan from 72.1 percent of GDP in 2018 to 77 percent in 2019 and to 79.1 percent in 2020.
The IMF report has projected net debt of Pakistan to increase to 72.7 percent of the GDP in 2019 and 75.3 percent in 2020 against 67.2 percent in 2018.
The report has projected government revenue decline to 14.9 percent of GDP in 2019 and 14.8 percent by 2020 against 15.3 percent during the same period of 2018.
The government expenditure is projected to increase to 22.2 percent of GDP in 2019 and 23.3 percent in 2020 compared to 21.8 percent in 2018.
According to the report, the country''s maturing debt in 2019 is estimated at 35.1 percent of GDP and by 2020 maturing debt is estimated to increase to 37.2 percent.
There would be total financing need of about 42.3 percent of GDP in 2019 increasing to 46 percent of GDP by 2020. The report has projected general government overall balance at negative 7.2 percent of GDP for 2019 and negative 8.7 percent in 2020 against negative 6.5 percent in 2018. Further the general government primary balance is estimated to be negative 1.7 percent in 2019, negative 2.2 percent of GDP in 2020 against negative 2.1 percent in 2018.
Many economies saw rising interest burdens, which exceeded 20 percent of total revenue in 2018 in Egypt, Pakistan, and Sri Lanka. As a result, emerging market economies have become vulnerable to rollover risks if they face large financing needs, the report stated.
Country experiences show mixed results, depending on the overall environment and incentives. Studies on absenteeism of teachers and nurses in several developing countries find that the level of wages did not have an impact.
On performance-related incentives, an experiment in Pakistan shows potential for undesirable consequences: while performance-based salaries of tax officials led to a significant increase in tax collection (by as much as 50 percent), bribe requests increased by 30 percent. Some studies suggest that higher wages can be effective if complemented with other institutional features, such as monitoring and sanctions, the report maintained.