ISLAMABAD: Federal Minister for Finance and Revenue, Shaukat Tarin, said Tuesday that the country’s net public debt was on declining trend and reduced to 81.8 per cent of debt-to-GDP ratio during the fiscal year 2020-21 (FY21), and was expected to come further down during the current fiscal year (FY22).
Addressing a press conference here, the minister said that net debt was recorded at 86.8pc of Gross Domestic Product (GDP) during FY19 and at 85.7pc during FY20, which indicated that it was on declining trend during the last three years of the incumbent government.
The minister, who was accompanied by Minister of State for Information Farrukh Habib and Special Assistant to Prime Minister (SAPM) on Food Security, Jamshed Cheema, said that the debt, however, was recorded at 74.1pc of GDP during FY18.
Explaining some underlining reasons for an increase in public debt, the minister said that when Pakistan Tehreek-e-Insaf (PTI) assumed power in 2018, it had to go to the International Monetary Fund (IMF) programme, which led to devaluation of rupee to 168 and an increase in discount rate to 13.25.
“Hence, an instant enhanced debt servicing from Rs1,500 billion to Rs2,900 billion, which enhanced the public debt,” the minister added.
Giving absolute figures of net debt during the last four years, Tarin said that currently the country’s net debt stood at Rs39 trillion compared to the net debt of Rs35.6 trillion in FY20, Rs33 trillion during FY19 and Rs25.7 trillion during FY18.
He said that there has been gradual increase in foreign exchange reserves held by the State Bank of Pakistan (SBP).
Briefing about inflation, the minister said the government had tried its best not to pass on the impact of international prices on to people, adding that the prices of various commodities were still low as compared to international and regional markets.
“For example, sugar prices increased by 48pc in international market but the government enhanced it only by 12pc. Palm oil increased by 50pc, but it went up by 33pc in Pakistan, wheat prices increased by 32pc in one year and here it was enhanced only by 15pc, prices of crude oil increased by 58pc but in Pakistan it increased by only 9.39pc,” he explained.
The minister said that increase in prices was an international issue right now. He said that in Pakistan, the Consumer price index (CPI) based inflation stood at 4.8pc in FY18, which went up to 6.8pc in FY19 and then 10.74pc in FY20 and reduced to 8.9pc in FY21 and would remain at 8pc during the current fiscal year.
Tarin said that the prices of various essential commodities has considerably increased in international market, citing that sugar was sold at $303 per tonne in 2018 now it is sold at $430 per tonne.
Likewise, wheat was sold at $188 per tonne in 2018 now it is sold at $274 per tonne while soyabean was at $775 per tonne in 2018 and is currently sold at $1436 per tonne, indicating a big jump whereas palm oil prices increased from $621 per tonne to $1136 per tonne.
The finance minister stressed that the increase in international prices during the past couple of years was due to low food production and high demand owing to Covid-19 and supply chain disruption.
However, he was of the view that since Pakistan was linked to international market and had to import, wheat, sugar, pulses, ghee, global prices impact the local market.
He emphasised the need to enhance production, which he said was strategy of the government as it had already earmarked hefty amount for this purpose. In addition, he added, the government would make scientific engineering process to analyze profits in the supply chain and squeeze role of middleman administratively.
In addition, he said, the government was also building strategic reserves to flood markets at time of need.
In the medium and long term, the government would build commodity warehouses, cold-storages so that farmers and purchasers are linked directly without involving middleman.
The minister said that the government also intended to provide targeted cash subsidy to around 40 per cent of the poor population to buy essential items, adding that the subsidies would be provided for purchasing flour, sugar and pulses and data of Ehsaas would be utilised for this purpose to target deserving population.
“Similarly, that government also intends to increase income and affordability of people to buy commodities,” he said, adding that the growth strategy introduced by the government was bearing fruit as the economy was growing by around 6pc.
The minister while talking about State Owned Entities (SOEs) said these were earning net profit of around 204 billion which declined to net loss of Rs286 loss in 2018. During 2019, the first year of PTI government, the loss reduced to Rs143 billion.
He said that around ten top loss-making enterprises account for 89pc of the aggregate losses and therefore, attention was focused on these SoEs including PIA, Pakistan Railways, Pakistan Steel Mills, Discos and ZTBL.
Speaking on the occasion, Special Assistant to Prime Minister on Food Security, Jamshed Cheema said that the government would also launch a programme to help maintain prices and quality of milk in the country.
He said the government wanted to shift agriculture towards promising crops keeping in view the growing population and increasing demand for food.
