Caretaker Minister for Finance, Dr. Shamshad Akhtar, acknowledged that Pakistan's public debt has reached "unsustainable" levels, and discussions are underway with provinces to restructure responsibilities, as reported by The News on Friday.
Addressing a conference in Islamabad, Dr. Shamshad shared, "Pakistan’s public debt breached the limits of Fiscal Responsibility and Debt Limitation Act since 2013-14, reaching unsustainable levels. There is no good news on the debt burden as multilateral institutions did not permit the restructuring of external debt."
Highlighting the debt arrangement with China, she stated, "So far Pakistan has undertaken a debt arrangement with China of $2.4 billion till 2024-25."
Dr. Shamshad emphasized the need for a cautious approach to debt restructuring talks, noting potential repercussions. Despite the challenges, she assured that Pakistan does not plan to delay repayments of external debt.
Discussing the fiscal deficit and debt burden, she explained, "The larger fiscal deficit pushed up the debt burden, forcing the country to breach the Fiscal Responsibility and Debt Limitation Act since 2013-14."
On the economic front, she outlined the government's strategy, including re-profiling domestic debt and transitioning from short-term to long-term bonds. However, external debt options were limited with 44% in the form of foreign loans.
Dr. Shamshad revealed plans to restructure the Federal Board of Revenue to increase the revenue-to-GDP ratio from 9% to 15% in the first phase. "We are trying to place a fair and equitable taxation system," she said, ensuring the broadening of the tax base and separating customs policy and operation to facilitate trade and eradicate smuggling.
Anticipating a GDP growth rate of 2% to 3% in the ongoing fiscal year, she quoted a World Bank report suggesting that Pakistan's economy could reach $2 trillion by 2047 with macroeconomic stability.
The Viability Gap Fund (VGF) will be established through a public-private partnership for development projects, and all departments devolved under the 18th Amendment will be abolished at the federal level.
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