Fiscal Responsibility and Debt Limitation Act 2005

Ministry submits compliance report to parliament

ISLAMABAD: The Ministry of Finance Monday submitted to Parliament compliance report on Fiscal Responsibility and Debt Limitation Act 2005, conceding that the government had breached targets of reducing revenue deficit to nil and scaling down debt to GDP ratio below 60 percent.

According to the report, the ministry said it required reducing the revenue deficit to nil not later than June 30, 2008 and thereafter maintaining a revenue surplus. 

The revenue deficit was recorded at Rs471 billion or 1.7 percent of GDP in 2014-15. The government is striving to achieve a revenue surplus so that borrowings are only utilized towards financing the development needs of the country.

The public debt was recorded at Rs18,143 billion as at end September 2015, registering an increase of Rs762 billion during first quarter of 2015-16.  Out of this total increase, increase in domestic debt contributed Rs520 billion while government borrowing for fiscal deficit was Rs273 billion during first quarter of 2015-16. 

This differential is mainly attributed to increase in government deposits with SBP which was utilized by the government in October 2015. External public debt increased by US$ 1 billion during first quarter of 2015-16 and recorded at US$ 51.9 billion. This increase was primarily driven by US$ 515 million commercial loans and US$ 500 million Eurobonds. In addition, 8th tranche under IMF Extended Fund Facility (EFF) added US$ 497 million in external public debt. 

An amount of US$ 910 million was repaid during the first quarter of 2015-16. In Pak Rupee terms, the depreciation of Pak Rupee against US Dollar by 2.7 percent during first quarter of 2015-16 contributed further increase in external public debt.

External Debt and Liabilities (EDL) stock was recorded at US$ 65.1 billion as at   end June 2015 out of which external public debt worth US$ 50.9 billion. Despite significant amount of disbursements by IFIs and mobilization of US$ 1 billion through issuance of Pakistan International Sukuk, public external debt witnessed a decline of US$ 425 million during 2014-15 primarily due to repayments and revaluation gain on account of appreciation of US Dollar against other major currencies.

The Servicing of public external debt fell by US$ 66 million in first quarter of 2015-16 compared to the same period last year and recorded at US$ 1,087 million. This was mainly on account of decline in repayment to the IMF.

At the end of first quarter of 2015-16, the government issued fresh/rollover guarantees amounting to Rs. 18.5 billion or 0.1 percent of GDP. Total outstanding stock at the end of September 2015 amounted to Rs. 670 billion. The outstanding stock issued against commodity operations was Rs. 477 billion at the end of the first quarter of 2015-16.