Govt takes steps to reduce dependence upon foreign, domestic loans: Dar

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ISLAMABAD, March 20 (APP): Minister for Finance, Revenue, Economic
Affairs, Statistics and Privatization Muhammad Ishaq Dar on Monday said several steps had been taken by the government to reduce dependence upon foreign and domestic loans.
The minister, in a written reply in the National Assembly, said fiscal consolidation remained on track as fiscal deficit continued to fall for the fourth year in a row.
He said fiscal deficit was contained at 8.2 per cent in 2012-13 (down from a projected 8.8 per cent), due to the concerted efforts by the government soon after assuming the office.
He said the fiscal deficit reduced significantly in 2013-14 and recorded at 5.5 per cent of GDP (lower than its budgeted target of 6.6 per cent) and recorded at 5.3 per cent of GDP in 2014-15.
He said the fiscal deficit reduced further at 4.6 per cent of GDP during 2015-16 supplemented by enhanced revenue mobilization and rationalization of non-development expenditure.
He said the government has set 3.8 per cent fiscal deficit target for the current year 2016-17 which would be further brought down to 3.5 per cent of GDP by 2018-19.
He said by increasing domestic revenues, the dependence on loans
was reduced as the fiscal gap was narrowed. In that context, domestic resource mobilization strategy helped in achieving higher revenue growth and tax-GDP ratio in recent years.
He said the FBR’s tax revenues had increased significantly during the last three fiscal years. In 2012-13, the revenue collection was Rs 1,946 billion which had increased to Rs 3,112 billion in 2015-16, registering an overall growth of around 60 per cent. The tax-to-GDP ratio which was below 9.8 per cent of GDP in 2012-13 had increased to 12.4 per cent of GDP during 2015-16, he added.
Dar said the development budget had been gradually and adequately
raised in order to meet the investment requirements of a growing economy. Federal PSDP gradually increased from Rs 348.3 billion during 2012-13 to Rs 800 billion for 2016-17, showing a cumulative increase of over 129 per cent.
He said Pakistan’s economy continued to maintain its growth momentum above 4.0 per cent for the third year in a row with real GDP growing at 4.71 per cent in 2015-16, which was the highest in eight years.
He said the economic growth was projected to continue its upward
acceleration in the coming years. He added the conducive economic environment coupled with supportive monetary policy provided an opportunity for the government to reduce the interest rates on its wholesales debt instruments along with aligning the rates on retail debt instruments with the market yields.
As a result, the cost of domestic borrowing, he said, had been substantially reduced as the weighted average interest rate on government domestic debt portfolio is reduced to a single digit as at end June, 2016.
Accordingly, the government domestic interest expenditure was reduced to 26 per cent of total revenue during 2015-16 as compared with 31 per cent during the last fiscal year, he added.