Debt to GDP ratio rises to 56.2% from 55.2%: Daily Times

By Sajid Chaudhry

ISLAMABAD: The ratio of debt to gross domestic product (GDP) has touched 56.2 percent of the GDP by the end of June 2008, up by 1.1 percent as against the target of reducing the debt to GDP ratio by 2.5 percent from 55.2 percent of GDP in 2006-07.

According to Debt Policy Statement 2008-09 on Monday, the year 2007-08 also witnessed the violation of two elements of the Fiscal Responsibility Debt Limitation Act (FRDL) 2005. Under the act, the government was required to achieve zero revenue deficit by the end of 2007-08. Instead of achieving this target, the revenue deficit jumped to a 10 year high, increasing to Rs 359 billion or 3.4 percent of the GDP. The act also required that the government would reduce public debt by at least 2.5 percentage points of GDP every year. The government could not meet this requirement as well. Public debt, instead of declining by 2.5 percentage points of GDP, has, in fact, increased by 1.1 percentage points. Revenue balance (total revenue minus current expenditure) not only breached the performance target but, in fact, deteriorated significantly during the fiscal year 2007-08.

During the outgoing fiscal year 2007-08, though Pakistan’s external debt and liabilities surged to $46.3 billion, as compared to $40.5 billion in the previous year, thereby showing an increase of $5.8 billion or 14 percent, it registered a further marginal decline of 0.5 percentage points to 27.6 percent of GDP.

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