Finance Minister Ishaq Dar, Tuesday, directed the concerned departments to align medium-term fiscal policy with the targets provided in the amended Fiscal Responsibility and Debt Limitations (FRDL) Act. The Minister also reiterated the government’s resolve to continue on the path of economic reforms program that was articulated at the beginning of 2013-14, and which had been successfully pursued in the last three-years.
While chairing a meeting here to review the five-year (2017-18 to 2021-22) macroeconomic framework, he emphasized that the government was focused on further improving the key macroeconomic indicators, including the investment-to-GDP and tax-to-GDP ratios. Furthermore, he underlined the importance of recent amendment in the FRDL Act which, for the first time, has provided for limiting the deficit of the federal government, as it requires the federal government to bring down its deficit in 3 years, starting with 2017-18, to 4% of GDP, and thereafter maintaining it at a maximum of 3.5%.
Additionally, he said that the law requires that the debt-to-GDP ratio will be brought down from current statutory limit of 60% to be achieved by next year further down to 50% in 15 years.
The Minister directed that these commitments should be built and adhered to in future projections of macroeconomic framework. He highlighted that a comprehensive and thorough macroeconomic framework enables the federal government, provincial governments as well as the private sector to plan ahead with confidence and take vital decisions in a timely manner.
The framework forms the basis of policy decisions in the areas of annual and multi-annual budgets, management of reserves, investments and economic growth. The Finance Secretary presented macro-fiscal forecasts highlighting key areas where policy interventions will be required to take the country on a higher-growth trajectory.