Debt Servicing Continues to be the Biggest Fiscal Challenge for Pakistan

Debt servicing of massive domestic and external loans remains a major fiscal challenge, Finance Ministry said.

The ministry said that the debt has accumulated over the past decade.

While referencing an article appearing in a section of the press, the ministry issued a statement saying that during the first half of the current financial year 2020-21, the Consolidated Primary Balance reflected a surplus of Rs. 337 billion (0.7 percent of the GDP).

It also shows that the overall Fiscal Balance was restricted to negative 2.5 percent of the GDP against the annual target of 7.1 percent.


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The ministry also said that there was a provincial surplus of Rs. 255 billion. These numbers suggest a healthy fiscal position of the provinces and also show that fiscal management has improved.

In the first half of FY21, the Federal Board of Revenue (FBR) was also able to realize 45 percent of the total target set for the current fiscal year, despite the downward pressures created by the pandemic, said the ministry.

Tackling the impact of COVID-19 also led to some unexpected and unavoidable expenditures, including the costs incurred to protect the vulnerable segments of society. However, in comparison, even then, the highest economic pressures still came from debt servicing costs.

The ministry’s statement said that it hoped to achieve the targets set for fiscal and primary balances for the current fiscal year through better debt management, controlled expenditures, and higher revenue collection.



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