Debt management cell to become operational next month: adviser

Adviser to Finance Ministry, Rana Asad Amin has said that a fully functional debt management cell would be made operational by next month to manage and reduce the country's debt-to-GDP ratio. Speaking as chief guest at the concluding session of National Debt Conference jointly organised by PRIME and Business Recorder in collaboration with Friedrich Nauman Foundation, Rana said the government plans to reduce public debt to less than 55 percent of GDP by June 2017 and move towards a sustainable profile.
He said to achieve the object, a debt management cell is being established, which is an essential component of Fiscal Responsibility and Debt Limitation (FRDL) law but so far the job remained unfulfilled. Amin further stated that for the first time, a full-fledged debt management cell would be in operation as three candidates have been short-listed for the purpose and would be interviewed soon. He said the government has taken various other measures to decrease the country's public debt and reduce the fiscal deficit by 2.5 percent in the first year. As a result, he maintained that the country's debt-to-GDP ratio was reduced to 62.8 percent in 2014 from 63.9 percent over the previous year. The lending of the private sector increased along with growth due to less government borrowing from the domestic market.
Amin said the government would further reduce the fiscal deficit by 0.6 percent during the current fiscal year to settle at 4 percent by 2015-16 for achieving revenue surplus. We also hope to be in revenue surplus and primary surplus by 2016 that would give the government fiscal space to retire the debt/debt servicing. He said the government is also working on improving debt management by decreasing reliance on short-term and expensive loans.
The advisor said that a misperception is being created that an amount of $34 billion is loan. He said only 30 percent of the $34 billion is loan to the government while the remaining 70 percent would be private sector investment. Amin maintained that the country's external debt has become less whereas domestic debt has escalated in recent years largely because of low foreign inflows in 2010-11. We are considering issuing $1 billion Sukuk Bonds in the third week of November. The advisor said the transaction is important for the government because it wants to convert current debt into these bonds.