Debt management report

Unfortunately for PTI govt, latest IMF staff-level report revealed significant spike in public debt and liabilities

The government appears to have a strong belief that keeping denying or withholding embarrassing information will make the problem go away. Why else would the finance ministry fail to release its biannual reports on debt management risk indicators? Could it be because of the steep rise in public debt and liabilities in the past year due to fiscal slippages and shortfalls in tax revenues?

The report for December 2018 is now 10 months overdue, while the June 2019 assessment report has been pending for the last four months.

The debt assessment report covers indicators such as Pakistan’s foreign currency debt as a percentage of official foreign currency reserves, debt refinancing risks, interest rate risks, and contingent liabilities. Some of those indicators have significantly deteriorated since the publication of the June 2018 report, which was the last one published.

Meanwhile, critics have said that improvements in a few indicators were attributable to the government’s decision to convert short-term borrowing from the State Bank of Pakistan (SBP) into long-term debt of up to 10 years, rather than net debt reduction.

This reprofiling of government debt held by the SBP into long-term securities, however, has significantly increased the average maturity of domestic debt and has reduced the government’s gross financing needs.

The reports themselves were an International Monetary Fund requirement imposed around six years ago. Pakistan had to publish quarterly reports, but as soon as the last IMF programme ended, the Pakistan Muslim League-Nawaz (PML-N) government reneged and decided only to issue biannual reports. The Pakistan Tehreek-e-Insaf (PTI) government is apparently trying to one-up its predecessor by stopping publication entirely.

Unfortunately for the government, the latest IMF staff-level report revealed a significant spike in the country’s public debt and liabilities.

Published in The Express Tribune, December 29^th, 2019.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.