ISLAMABAD: The government on Thursday projected the country’s total public debt to increase by 47 per cent in five years to Rs45.57 trillion from Rs31tr at the end of FY19.

In its Public Debt Management Plan for FY20-24, the Ministry of Finance also estimated the total external debt increasing by 80pc to Rs18.77tr in FY24 from Rs10.446tr at present.

On the other hand, the plan estimates the total domestic debt to increase by over 30pc to reach Rs26.8tr by FY24 from Rs20.57tr at the end of FY19.

However, despite the massive increase in public debt stock, the debt to GDP ratio is estimated to come down from 80.4pc at present to 66.5pc by FY24.

The Public Debt Management Plan was presented on Thursday to the National Assembly’s Standing Committee on Finance and Revenue led by former finance minister Asad Umar.

The committee postponed discussions on the debt management plan because it was placed on the table during the meeting against the rules that require circulation of agenda items and working papers to the members of the committee at least three days before the meeting.

The committee members and the chairman agreed to postpone the agenda to a future meeting possibly next week for informed discussions and recommendations.

The report said the country’s total public debt would keep gradually increasing every year in absolute numbers but would decline as a percentage of GDP mainly because of a massive 78pc increase in the size of the economy (GDP) to Rs68.5tr by FY24 when compared to Rs38.56tr at the end of FY19.

The report said the total public debt, that stood at Rs31tr in FY19 will increase to Rs35tr in FY20, Rs38.6tr in FY21, Rs41.2tr in FY22, Rs43.2tr in FY23 and Rs45.5tr by end of FY24.

As percentage of the GDP, mainly on the back of expansion in size of the economy, the country’s total debt is estimated to reduce from existing 80.4pc of the GDP to 79.4pc in FY20. In the subsequent FY21, the total public debt is projected at 76.8pc followed by 73.5pc in FY22 and 70.1pc of the GDP by FY23 and 66.5pc in FY24.

Amendment to Essential Services Act

The committee rejected a bill moved by the Ministry of Finance to amend Essential Services Act 1952 to prohibit union activities in Pakistan Mint due to strong reservations expressed by the members and chairman of the committee over the questionable language and objectives of the proposed amendments.

They believed the proposed bill was also against the spirit of the Constitution of Pakistan.

The Pakistan Coinage (Amendment) Bill, 2019, seeking ban on activities of trade union, Naveed Qamar, Nafeesa Shah and Aisha Ghaus Pasha and Asad Umar believed said the proposed amendment was in conflict of the Constitution and may entail adverse consequences for GSP plus review under which Pakistan enjoyed preferential market access in the European Union.

Naveed Qamar said the justification given for the proposed amendment was not acceptable simply because restriction on union activities was violation of the constitution and may have negative implications by Europe where GSP plus status was under review of complying with international human rights standards.

He pointed that Punjab government had put certain limits to union activities as part of its ease of doing business to facilitate investors but the move was strongly criticised by Brussels.

He said that Pakistan representatives had tried of pacify the EU members saying it was erroneously added but the damage had been done. He said the proposed bill once approved would further affect Pakistan’s exports.

However, top officials of Pakistan Mint and finance ministry said the amendment was proposed to impose ban on ‘harmful union activities’ that may result in turning the now profitable entity into losses, hamper smooth coinage of army medals.

They said the Pakistan Mint was also responsible for purifying and converting gold into 5kg bars and then depositing it to the State Bank of Pakistan and its security could be compromised by union activities.

Published in Dawn, October 4th, 2019