Islamabad [Pakistan], January 26 (ANI): A report prepared by Pakistan's Ministry of Finance showed that the federal government's burden was Rs 11.8 trillion higher than legally allowed limit set by parliament and that some targets fixed under the debt management strategy were also breached.
The federal cabinet on Tuesday approved placing the Debt Policy Statement 2021-22 before the National Assembly to meet a requirement of the Fiscal Responsibility and Debt Limitation Act of 2005, reported The Express Tribune.
The policy statement analysed the debt conditions during the fiscal year 2020-21 - the third year of the ruling Pakistan Tehreek-e-Insaf.
The cabinet approved the report a day after the PTI government took the most expensive asset-backed loan in the history of Pakistan by paying 7.95 per cent interest rate on seven-year Sukuk.
Meanwhile, the International Monetary Fund has given three more days to Pakistan for review of its case.
The Ministry of Finance statement also showed that contrary to the claims made by the government that the debt burden was increasing due to repayment of old loans, the external debt repayments in fact reduced by USD 2.1 billion or 23.3 per cent in the last fiscal year as compared with the preceding fiscal year, reported The Express Tribune.
The cost of interest payments also reduced from USD 2 billion to USD 1.5 billion due to debt suspension initiative by the G20 countries. The government's reliance on highly expensive and shorter-term foreign debt also further increased due to its decision to increase dependency on foreign commercial banks and Naya Pakistan Certificates, reported The Express Tribune.
The government's reliance on domestic commercial banks also significantly increased, as the banks held nearly half of the government debt papers or Rs 12.8 trillion, according to the report.
The finance ministry informed the federal cabinet that "the ratio remained higher than the threshold of 59 per cent (Rs 28.1 trillion) to be achieved by fiscal year 2020-21 as stipulated in Fiscal Responsibility and Debt Limitation (FRDL) Act".
In absolute terms, the Rs 39.9 trillion debt stock was higher by Rs 11.8 trillion when compared with the statutory limit set under the law, reported The Express Tribune.
The debt policy statement has been prepared on the basis of the old base year of the economy, which the government last week approved to change to new year.
This change in base year will help reduce the debt-to-GDP ratio to nearly 72 per cent but there would not be any reduction in the debt size.
Pakistan economic struggle has started to increase under Imran Khan's Pakistan Tehreek-e-Insaf (PTI) compounding with the increase in domestic inflation rates and external loan defaulting. (ANI)