Violation of 'Fiscal Responsibility and Debt Limitation Act': SHC seeks replies from government, SBP & DPCO by March 19

Sindh High Court on Wednesday issued notices to the federal government, State Bank of Pakistan (SBP) and Debt Policy Coordination Office (DPCO) in petition related to increase in public debt in violation of "Fiscal Responsibility and Debt Limitation Act, 2005".

A division bench of the SHC headed by Justice Muhammad Ali Mazhar issued these orders in petition, filed by Barrister Ali Tahir, who prayed the court to declare increase of public debt to gross domestic product over 60% illegal and unlawful.

The federal government through Finance Secretary, SBP and Debt Policy Coordination Office has been made respondents in the petition. The court ordered the respondents to furnish their replies by March 19, 2020.

The petitioner submitted that the "Fiscal Responsibility and Debt Limitation Act, 2005" (as amended in July 2017) provides in Section 3(3)(b) that within a period of two financial years, beginning from the financial year 2016-17, the total public debt shall be reduced to sixty percent of the estimated gross domestic product. Total public debt until September 2019 was calculated to be Rs 34,241 Billion, while the GDP was Rs 44,003 Billion which amounts to 77.8% of public debt to gross domestic product according to the Debt Policy Statement 2019-2020.

The petitioner stated that the "Fiscal Responsibility and Debt Limitation Act, 2005" Section 3(4) provides that the Federal Government can only depart from Section 3(3)(b) on the grounds of unforeseen demands on the finances of the Government due to national security or natural calamity.

Even then the departure can only be temporary' and the Finance Minister has to specify the reasons for the departure, the petitioner contended.

The petitioner argued that as per press release by the Ministry' of Finance in December 2019, the International Monetary Fund has released another $452.4 million as debt to Pakistan, which amount to more than Rs 69 Billion despite being aware that they have breached Section 3(3)(b) of the "Fiscal Responsibility and Debt Limitation Act, 2005.

The petitioner prayed the court to direct Debt Policy Coordination Office to specify the reasons for the departure, the approach or measures the federal government intends to take to return to those principles, and the period of time that the government will take to return to those principles in accordance with Section 3(4) of the Fiscal Responsibility and Debt Limitation Act, 2005.

The petitioner also requested the court to direct the respondents to act strictly in accordance with the Fiscal Responsibility and Debt Limitation Act, 2005.