Review of domestic and external debt of Pakistan.

Byline: S. Kamal Hayder Kazmi

International studies identified that economic growth and development is a main goal of most developing states; hence resources are mobilized from various sources counting external borrowing for investment into feasible projects for growth acceleration in any state. It is also identified that sustainable economic growth is a predominant concern for all states, particularly developing economies that regularly face burgeoning fiscal deficits mostly driven through higher levels of debt service, mainly foreign debt servicing and widening current account deficits.

In the developing state like Pakistan, current statistics showed that general government debt (counting guarantees and IMF borrowing) fell to 84.7 percent of Gross Domestic Product (GDP), from 88 percent. A present released report on Pakistan by IMF said this fall in debts was mostly driven through the government's smart performance in reducing expenditures, registering primary budget surplus and growing tax and non-tax revenues during the first five months of this fiscal year.

Statistics in the report also showed that in the first quarter of FY2019-20, budget execution by the incumbent government enhanced significantly, recording a primary surplus of 0.6 percent of GDP and an overall deficit of 0.6 percent about 1 percent of GDP better than programmed. It is said that the over performance was driven through stronger than predicted non-tax revenues, accompanied by double-digit growth in tax revenue net of refunds. At the same time, because of import compression, customs receipts and other external sector-related taxes have suffered, the report identified, adding that spending, counting through the provinces, has remained prudent.

However, a present released report on Pakistan by IMF during FY2019, the budget recorded a primary deficit of 3.5 percent of GDP and an overall deficit of 8.9 percent, against its target of 1.8 percent and 7 percent, respectively. A revenue collection at the federal level came in at 2 percent of GDP, lower than predicted, while total expenditures and provincial fiscal balances were in line with projections. Around three-fourth of the revenue shortfall were because of one-off factors, which are not predicted to carry over into FY20.

In particular, present IMF report also recorded that delays in renewing telecom licenses, a temporary delay in the sale of state assets, and weaker than predicted amnesty proceeds contributed around 1...