ISLAMABAD, Pakistan: Pakistan’s economy witnessed tremendous growth in the past four years of the incumbent government whereby the size of the economy grew from $225 billion in 2013 to $304 billion in 2017, the Finance Division said on Saturday.
In a statement, the Spokesman of the Finance Division categorically rejected a report carried by a section of press, “Dar’s Legacy: a heavily-indebted Pakistan”, saying an aggregate growth of 35 percent was constituted during the last four years.
The Spokesman said this was only made possible by the prudent policies of the government that included historically low domestic interest rates, a prolonged and sustained period of low inflation and price stability, significant surge in private sector credit, huge increase in Public Sector Development Programme (PSDP) spending and above all an effective monetary policy coupled with a judicious fiscal policy that saw the budget deficit come down from 8.2 percent in 2013 to 5.8 percent in 2017.
The news report said Pakistan’s total debt and liabilities had increased to Rs 25.1 trillion. It further said total external debt and liabilities had increased to roughly $83 billion by end of fiscal year 2016-17 and a sum of $8.2 billion had been spent on external debt servicing.
The report unduly criticized the changes made in Fiscal Responsibility and Debt Limitation Act 2005.
However, the Spokesman said the report had portrayed a negative picture of the economy by analyzing the debt in isolation and completely ignoring positive developments witnessed during the past few years. He argued the writer had used exaggerated numbers which created doubts and mislead the general public. He added the debt burden was better understood in comparison to its relation with the gross domestic product (GDP) instead of absolute debt numbers.
The Finance Division Spokesman said another way to gauge the increase in public debt burden of the Country was to compare that with relevant global debt statistics.
In this regard, Pakistan witnessed a marginal increase of 1.4 percent (from 60.2 percent in 2013 to 61.6 percent in 2017) in its total debt to GDP ratio during last four years while during the same period, global debt to GDP ratio increased by about 8 percent (Source IMF World Economic Outlook).
Similarly, external public debt stood at US$ 62.5 billion while news report showed total external debt and liabilities number amounting US$ 82.7 billion at end June 2017 to sensationalize the issue.
The rationale of using external public debt instead of external debt and liabilities had been clarified at many forums, he maintained.
The Spokesman said total External Debt and Liabilities included the debt of other sectors (private sector, bank borrowing) which were not part of public debt since the government was not liable to pay these obligations.
The Spokesman said the external public debt increased from US$ 48.1 billion to US$ 62.5 billion i.e. by US$ 14.4 billion while non-public debt rose by US$ 7.3 billion. Therefore, it was incorrect to assume that debt per capita is Rs 120,381, he added.
In addition, he said the news report made a false claim that the government had made amendments in the Fiscal Responsibility and Debt Limitation (FRDL) Act 2005 to conceal the worsening debt picture.
In fact, he said, most of the clauses of FRDL Act were outdated and the present government not only updated the clauses in accordance with the present economic realities but also defined path with an objective to improve the fiscal and debt situation of the Country along with formalizing the definition of public debt.