ISLAMABAD – International Monetary Fund has raised serious alarm bells forPakistan as Pakistan’s total public debt has hit the dangerous limits,highest ever in history.
The International Monetary Fund (IMF) on Wednesday has said Pakistan’spublic debt may rise this year to 78.6pc of the total size of its economy,which is not only higher than the previous year but also in violation of anact of the parliament, a private media outlet reportedlink.
The Global Financial Stability Report further said the budget deficit gapbetween expenditures and revenues would remain at 7.4pc of the GrossDomestic Product (GDP), which is also slightly higher than the officialtarget set by the Ministry of Finance.
The higher budget deficit and public debt projections would mean that over60pc of the Federal Board of Revenue’s (FBR) taxes would be consumed inservicing the debt, which grew at an alarming rate in the last fiscal year2018-19.
Against 76.7pc public debt in the last fiscal year, the public debt maysurge to 78.6pc of the GDP by end of current fiscal year 2019-20. Theprojected level of public debt was slightly higher than the target set bythe Ministry of Finance at the time of the budget. The 78.6pc public debtwill be equal to Rs34.6 trillion.
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According to the Fiscal Responsibility and Debt Limitation Act of 2005, thepublic debt has to be lower than 60pc of the GDP or Rs26.4 trillion. Thismeans, the public debt will be at least Rs8.2 trillion higher than thelimit set in the FRDL Act.
The IMF debt projections are lower than the forecasts given by the WorldBank (WB) in its latest report, South Asian Economic Focus Fall 2019. TheWB has said the public debt-to-GDP ratio is expected to remain high at82.9pc of the GDP in this fiscal year.
