Staff Reporter
Islamabad
The overall pension spending as a share of tax revenue in the country has reached to 18.7 percent as of Fiscal Year 2020, that is almost double, a decade earlier, while the pension to GDP ratio has also risen to the level of 2.2 percent, State Bank of Pakistan reported.
The report issued by the Central Bank feared that if this proportion continues to grow, it could result in the crowding out of other valuable spending avenues: pension spending as percent of total budgeted expenditures for FY20 exceeded health and education spending on both federal and provincial fronts and is almost half the level of consolidated development expenditures.
In this regard, International Financial Institutions (IFIs), such as the World Bank and the International Monetary Fund (IMF) have also started flagging the rising pension expenditure as a pressing concern for Pakistan’s debt sustainability.
What is even more concerning is the fact that pension expenditure is expected to risefurther going forward, given the increase in both retiree headcount and the lifespan of future retirees.
