Pakistan's debt-to-GDP ratio crosses 61% |
Date: 2010/6/29 Click: 1882 |
|
ISLAMABAD, June 27 (Xinhua) -- Pakistan's central bank said the country's total debt-to-GDP ratio has crossed 61 percent during the current fiscal year, breaching the 60 percent limit set under the Fiscal Responsibility and Debt Limitation Act, local media reported on Sunday.
According to the report of the State Bank of Pakistan on its official website, Pakistan's external debt-to-GDP ratio hit 30 percent while the domestic debt-to-GDP ratio mounted to an alarming level of 31 percent.
Despite better performance on the external front, domestic public debt remains on the rise, up by 20 percent during the 11 months of the current fiscal year, said the report.
Pakistan has been facing the burden of mounting debt pressure. The same stems from escalating fiscal deficit of the country as compared to the budgetary estimates.
During the current fiscal year of 2010 which closes at the end- June, the fiscal deficit rose to 5.2 percent of the GDP against the budgeted 4.7 percent. The domestic side remained a prominent source of financing fiscal deficit.
A differentiating factor came in the form of the International Monetary Fund's (IMF) budgetary support under its augmented funding plan for Pakistan.
The contribution of the IMF funding in the overall external financing of the country has risen. The IMF's total share in external debt has risen from 4 percent in the fiscal year of 2006 to 14 percent till the third quarter of the current fiscal year.
Contribution of public debt under total external debt dropped to 82 percent from 91 percent in fiscal year 2006.
The disbursements under the IMF program are expected to conclude in fiscal year 2011, but it remains to be seen whether the government will seek further budgetary support from the global donor during fiscal year 2011 in case additional inflows from sources such as the United States under the Kerry-Lugar and Tokyo pledges fail to materialize on time.
Even though the IMF program contributed towards bringing stability, favorable external factors also played a major role.
The country's current account deficit has shown substantial improvement as it dropped by 66 percent during the first 11 months of the current year. Credit should be given to better export performance, which registered a growth of three percent during the period.
However, the real savior was in fact the recessionary condition in the global markets, which kept commodity prices, especially oil under stress. The result is evident as imports registered a decline of 3.5 percent.
Another commendable aspect is record level of remittances, which is set to reach 8.8 billion U.S. dollars in the current fiscal year, thereby providing desirable support to the overall balance of payments in the absence of foreign direct investment.
Despite better performance on the external front, domestic public debt is still on the rise. Overall public debt, thereby, remains a strong source of vulnerability to the economy and mounting domestic debt is also strongly suggesting an interest rate rise in the offing. |