Debt to GDP ratio projected to decline in coming years

Federal Minister for Economic Affairs Hammad Azhar said on Saturday that with currency stabilizing and deficits receding, the country's debt to GDP ratio is projected to decline in coming years. The minister took to Twitter and stated, "Pakistan's public debt increased from 72% to 84% of GDP during the fiscal year 2018-19. Close to half of this increase in public debt came from devaluation i.e. revaluation of pre-existing debt at market exchange rate."

He further tweeted, "The devaluation became inevitable due to flawed economic policy of previous government that led to the highest external deficits, depleting forex reserves, highest debt servicing. Also Rs 1.2 trillion of cash reserve was creating by one time debt before moving towards policy of zero borrowing from State Bank of Pakistan (SBP)."

He continued, "With currency stabilizing & deficits receding, debt to GDP is projected to decline in coming years. Statistically masking or undervaluing actual value of debt by an over-valued exchange rate, artificially kept afloat by depleting forex reserves and more debt is not sustainable."