Islamabad
The Finance Ministry on Sunday clarified that the government borrowed only Rs 4.11 trillion during 15 months to finance its budget deficit.
“The figure of increase in Total Debt and Liabilities by Rs 11.61 trillion being reported in the media needs to be properly interpreted as the government borrowed only Rs 4.11 trillion to finance its budget deficit,” says a press release issued by the ministry.
It said that the Finance Division lays before the National Assembly the Debt Policy Statement and Fiscal Policy Statement every year to fulfill the requirements laid out under Section 6 and 7 of the Fiscal Responsibility and Debt Limitation Act 2005. The recent statements cover the 15-month period including FY 2018-19 and first quarter of FY 2019-20 and contain all factual information with respect to debt and fiscal performance over the stated period.
According to the statement, the figure of total debt and liabilities consists of five components including (1) Total Public Debt; (2) Public Sector Entities’ (PSE) Debt; (3) Debt for Commodity Operations; (4) Foreign Exchange Liabilities of State Bank of Pakistan (SBP); and (5) Private Sector’s External Debt.
Out of the total increase of Rs 11.61 trillion in Total Debt and Liabilities during Jul 2018 – Sep 2019, Rs 3.54 trillion (31% of the increase) is due to currency depreciation which is a consequence of the misplaced exchange-rate, industrial, and trade policies of the previous government that led to large and unsustainable current account deficits and ultimately to sharp exchange rate adjustment;
Likewise, Rs 3.13 trillion (27% of the increase) is on account of cash balances and SBP’s foreign exchange liabilities, it said adding that it should not be interpreted as Debt because it is offset by cash balances of government and liquid assets of SBP.
The statement said that Rs 4.11 trillion (35% of the increase) has been borrowed for financing of fiscal deficit; Rs 0.47 trillion (4% of the increase) borrowed by PSEs for spending on their financing needs; whereas Rs 0.08 trillion (-1% of the increase) has been tired on account of commodity operations which is a welcome development.—APP
