ISLAMABAD: The National Assembly, Friday passed “The Fiscal Responsibility and Debt Limitation (Amendment) Bill, 2022” to raise the limit on the stock of government guarantees from the existing two to 10 percent of Gross Domestic Product (GDP).
Minister of State for Finance and Revenue Dr Aisha Ghous Pasha presented the report of the Standing Committee on Finance and Revenue on the “The Fiscal Responsibility and Debt Limitation (Amendment) Bill, 2022” in the house. The bill was not included in the legislative business but the house passed a motion to put it in legislative business. So, the house passed the bill without any discussion.
The Fiscal Responsibility and Debt Limitation 2005, amended in 2017, provided for a reduction of federal fiscal deficit and ratio of public debt to gross domestic product to a prudent level by effective public debt management.
The objective of “The Fiscal Responsibility and Debt Limitation (Amendment) Bill, 2022”for passing the following amendments: (i) limit the stock of government guarantees at 10 percent of GDP; (ii) publication of Medium-Term National Macro-Fiscal Framework; (iii) institutionalize debt management functions in a single office reporting to the Finance Secretary; (iv) Assignment of additional functions to Debt Office; and (v) create two additional senior management positions within Debt Office.
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Proposed amendments to strengthen the Debt Office with the mandate and resources for effective planning and execution of debt management functions of the government, maintained the proposer of the bill the Minister for Finance.
The Debt Policy Coordination Office was also established under this Act. Clause 3 of the bill, amendment in section 3 of the Act 2005 notes, “provided further that the total stock of outstanding guarantees shall not exceed 10 percent of estimated GDP. Explanation: For the purpose of this clause, each guarantee shall be valued at its risk-weighted value in accordance with a valuation methodology to be prescribed.”
In another amendment in clause 4 of the bill, addition of section 7A in the Act 2005 as “(1) The Finance Division shall prepare medium-term national macro fiscal framework, covering aggregate fiscal projections specially revenues, expenditures and primary balances of the upcoming fiscal year and the two outer years in respect of federal government, Provincial governments and other areas of Pakistan; which shall be presented not later than the 15th day of March of the ongoing fiscal year to the National Finance Commission (NFC) Monitoring Committee.(2) The approved medium-term national macro fiscal framework shall be published in the budget strategy papers and annual budget statements of the federal, provincial and other governments as part of their budget documents.”
According to clause 6 of the bill, “(1) within sixty days of the commencement of the Fiscal Responsibility and Debt Limitation (Amendment) Act, 2022, the federal government shall, by notification in the official Gazette, establish an office to be known as debt management office, consisting of four executives including a director general and thee directors.
Directors shall report to the director general and the director general shall report to the Sectary, Finance Division .(2) The director general and the directors shall be appointed on contract basis for a term of three years in such manner on the basis of such eligibility criteria including academic and professional qualifications and experience as may be prescribed. The contract may be extended subject to performance evaluation, for a similar term of three years.”
Copyright Business Recorder, 2022