ISLAMABAD: The Senate on Friday was informed that government debt was on a firm downward trajectory, wherein debt to Gross Domestic Product (GDP) ratio had decreased by 4 per cent during the fiscal year 2020-21 (FY21) despite the economic slowdown caused by the coronavirus (COVID-19) pandemic.
“The government expects that this ratio will decrease further by 2-3pc during the ongoing fiscal year (FY22). Over the medium-term, the government’s objective is to ensure gradual reduction in fiscal deficit, which will subsequently reduce country’s reliance on additional debt,” Minister of State for Parliamentary Affairs Ali Muhammad Khan said during the question-hour, on behalf of the Minister for Finance and Revenue.
Answering to a question, he said the government had paid Rs7,460 billion as interest on its debt, adding that “total public debt increased by Rs14,906 billion during the last three years, out of which 50pc, Rs7,460 billion, was due to interest payments.”
He said the government was taking necessary steps for ensuring fiscal discipline and consolidation, stabilizing the economy and accelerating growth.
Responding to another question, Ali Muhammad Khan said the government had set the General Provident (GP) fund rate based on the interest rate of 10-year floating Pakistan Investment Bonds (PIBs) issued during any fiscal year.
He said the applicable average yield/interest rate was 7.9pc for FY21. “Since, GP fund rates are linked with floating rate bonds, policy rate in the economy has a major influence in determining this rate for any fiscal year i.e. policy rate was high in FY20 whereas it reduced in FY21”.
Accordingly, the minister said, the lower mark-up rate had been set on GP fund in FY21 as compared to last fiscal year.
“There is no proposal under consideration to increase the mark-up, and rates for this year will be determined as per given criteria,” he said.
