ISLAMABAD: The Ministry of Finance categorically refuted news itemappearing in a section of press regarding budget deficit saying that theclaims made in report were based on miscalculations.
In response to contentions made in a news report ”Pakistan Budget Deficitincreases to Rs 826 billion”, carried by a section of media, the ministryclarified that fiscal deficit data was not compiled on monthly basis noris it reported on its website.
The data is compiled on quarterly basis after receipt of required data fromEconomic Affairs Division (EAD), State Bank of Pakistan (SBP) andprovincial governments with a time lag of almost two month, it added.
The month wise data is adjusted for compilation of quarterly fiscaloperation data and then it is made for public and also placed on theMinistry of Finance website for dissemination.
As first quarter fiscal operation data of the current year is available,the statement said adding that the article has referred five months 2017data and drawing conclusions which is too early.
Moreover, the article is contradictory in its statement that thedevelopment spending was increasing on political motivated developmentsschemes which is amounted to roughly Rs 180 billion, while on the otherhand it has been narrated that development spending is significantly lowerwhich should have been close to Rs 300 billion.
It is pertinent to mention here, the article acknowledges the fact that theannual budget estimates for fiscal year 2017-18 are Rs.1,363 billion whiledebt servicing during July – November provisionally stood at Rs.625 billion.
By presenting these numbers, the article negates itself as it is evidentthat debt servicing numbers during first five months of current fiscal yearare in accordance with the budget estimates and are expected to remainwithin the annual budget estimates.
Therefore, any claim that debt servicing was the reason for higher thanbudgeted fiscal deficit was not correct.
Moreover, debt servicing was recorded at Rs.647 billion during first halfof last fiscal year, therefore, provisional debt servicing number of Rs.625was not unusual keeping in view the expected growth in revenue and GDPduring 2017-18 and was lower than the last year.
It is also clarified with regard to reliance on short-term domestic andforeign borrowings has significantly increased the debt servicing cost. Asopposed to claim, short term domestic loans entails lower interest rates,hence contributed less to debt servicing cost.
The total Public Debt to GDP ratio recorded at 67.2 percent while totalgovernment Debt to GDP ratio stood at 61.6 percent at end June 2017.
Pakistan witnessed a marginal increase of 1.4 percent (from 60.2 percent in2013 to 61.6 percent in 2017) in its total government debt to GDP ratioduring last four years while during the same period global debt to GDPratio increased by about 8 percent (IMF World Economic Outlook).
Furthermore, developed countries like USA, UK and Japan also carry debt andmaintain levels as high as 80 to over 100 percent of their GDPs, well overPakistan debt to GDP levels.
Even in the developing country peer group, Egypt, Sri Lanka and India carryhigher debt to GDP levels than Pakistan. Therefore, neither the number northe context of the statement is correct with reference to debt to GDPratio, it added.