Asad vows to reduce debt to GDP ratio as only $4.2 b external borrowings made till March

ISLAMABAD, April 3 (APP):Asserting that the Debt to GDP ratio had hiked beyond the Fiscal Responsibility and Debt Limitation (FRDL), Finance Minister Asad Umar said on Wednesday that the government would reduce it gradually and put it in a better position at the completion of its tenure in 2023.

“Debt as a percentage of GDP will gradually decline but it will still not be meeting FRDL limits because it has gone so high and is on upward trajectory,” the minister said in a Question and Answer Session with leading digital and social media forums here.

He said after containing the debt to GDP ratio at its existing level, the government would take measures to bring it downwards. However, the FRDL limits would not even be met by 2023, he added.

The minister said there had been one-third reduction in external borrowings as debt acquired during July-March (2018-19) was recorded at $4.2 billion compared to $6.7 billion borrowed by the Pakistan Muslim League government during July-March (2017-18).

He, however, admitted that there was an increase in domestic borrowings by the incumbent government during the period under review, compared to the borrowings of same period of last year.

However, he said the cumulative borrowings were more or less the same by the current government compared to the last year of previous regime.

He noted the PTI government had taken debt in its initial period when it had to stabilize the economy, whereas the same was acquired by the previous government at the end of its tenure, which made the difference.

He was of the view that the country’s economy had been taken out of the crisis situation. The government had to take hard decisions to put the economy on right track.

He said the government had inherited huge current account deficit with depleting foreign exchange reserves. However, the situation had now improved and would further move towards betterment.

To a question, he said the revenue collection target of Rs 8,000 billion by 2023 was a realistic one as it was made on the basis of proper evaluations.Finance Minister Asad Umar said in addition to low performance by Federal Board of Revenue (FBR) , there were many other reasons that contributed in negative growth in revenues during the current year.

He said reduction in petroleum prices and decrease in imports had also impacted the revenue collection.

On the occasion, State minister for Revenues, Hammad Azhar said the government had launched an awareness campaign to promote tax culture in December 2018, adding as a result the number of tax-filers had increased by 34 percent.

He said the government was diving deep to resolve the problems of FBR by improving and regulating the audit system, besides promoting technological driven interferences in the collection system.

Asad Umar justified the government’s decision to go to International Monetary Fund (IMF) to overcome its balance of payment issues.

He said no doubt, switching to IMF put burden on economy and people, but it was required for stabilization, adding if the government had opted otherwise, it would be counterproductive and put more burden on the economy.

He was of the view that delay in going to IMF had favoured Pakistan in many ways.

He, however, added that efforts would be made to put less burden on vulnerable segments of society and utilize resources on those areas which would help in job creation besides supporting private investments.

He said institutional reforms were made to promote capital market, which had lost attraction, adding the government made new Securities and Exchange Commission of Pakistan (SECP) policy board besides changing its leadership to improve its performance and effectiveness.

Talking about the digitization, the finance minister said this was the solution to all economic issues.

He said the State Bank of Pakistan (SBP) had recently introduced Electronic Money Institutions (EMIs) regulation which would pave way for digital payments and help in creating an ecosystem that would help digitization of economy.

He said revival plans of Pakistan Steal Mills and Pakistan Air International would soon be presented to the prime minister.

To a question, he said if the tax amnesty schemed was launched by the government, it would not applicable for public office holders.

He said devaluation of currency was linked with economic policies, saying that Pakistani rupee’s depreciated against dollar was due to the policies of the previous government, adding the dollar had reached to Rs127 during the PML-N’s government last year.

The minister said power losses had been reduced due to immediate and improved actions of the government.

He said during the last two months the losses had reduced to 16.5 percent as compared to the losses of 18.5 percent in the past government.

Umar was of the view that administrative and technological interventions were imperative to improve the overall system and highlighting the need for making market-based system by decentralizing it.

He said exports were expected to show positive growth from April 2019 onwards.

He said the inflation which remained in double digits during the PML(N) government has also been contained in single digit during the first seven months of the current government. Asad Umar said the government was primarily focusing on documenting the economy for ensuring transparency and accountability.

He was of the view that digitization of economy was the solution to check tax evasions and broaden tax-base.

He said the implementation of reforms was a gradual but slow process, however its fruits could be harvested on medium and long-term basis.

The minister said Pakistan had availed twelve IMF programs in past thirty years only to meet balance of payment situation.

The minister admitted that the government was facing budget deficit and current account deficit, hence posing a huge challenge for it.

He said there was a considerable reduction in current account deficit which had gone up by over $2 billion per month, adding enhancing exports was the only solution to reduce the deficit.

He said the government was committed to create employm
ent opportunities for people through growth in housing, SMEs , manufacturing, tourism and Information Technology sectors.