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Pakistan’s debt at ‘unsustainable’ levels, warns finance minister

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  • Dr Shamshad Akhtar says economic revival package on the cards.
  • Says govt to restructure FBR to increase revenue to GDP ratio.
  • We are trying to bring a equitable taxation system, says minister.

ISLAMABAD: Caretaker Minister for Finance Dr Shamshad Akhtar while admitting debt had reached “unsustainable” levels shared that the government is in talks with the provinces to shift responsibility for Benazir Income Support Programme (BISP), hand over provincial PSDP projects and close down devolved departments for rationalising expenditures, reported The News on Friday.

“Pakistan’s public debt breached the limits of Fiscal Responsibility and Debt Limitation Act since 2013-14 and it has reached unsustainable levels. There is no good news on the debt burden as multilateral institutions did not permit the restructuring of external debt. The G-20 had granted Debt Service Suspension Initiative (DSSI) during the Covid-19 pandemic. So far Pakistan has undertaken a debt arrangement with China of $2.4 billion till 2024-25,” she said while addressing an SDPI conference in Islamabad on Thursday.

Shamshad addressed all the macroeconomic issues confronting Pakistan and said they were moving towards a democratic transition, and an “economic revival package” was on the cards to achieve self-reliance and ensure integration of the economy with regional countries.

She warned that the debt restructuring talks should be dealt very carefully as it will have repercussions. However, she made it clear that Pakistan does not plan to delay repayments of external debt. The larger fiscal deficit pushed up the debt burden, so the country was forced to breach the Fiscal Responsibility and Debt Limitation Act since 2013-14.

On the domestic debt front, she mentioned the government was moving on the path of re-profiling to move from short-term debt to long-term bonds of 3 to 10 years to reduce the cost of borrowing. However, on external debt, she said options were limited as 44% of overall public debt was in the shape of foreign loans.

Dr Shamshad said the government would restructure the Federal Board of Revenue to increase the revenue-to-GDP ratio from 9 to 15% in the first phase.

“We are trying to place a fair and equitable taxation system,” she said and assured that the tax base would be broadened. The customs policy and operation would be separated with the objective of facilitating trade and eradicate smuggling.

The finance czar said that the GDP growth rate would hover around 2% to 3% in the ongoing fiscal year. She added that the business and investors’ confidence had been restored.

Quoting a WB report, she said Pakistan’s size of economy could touch $2 trillion if the macroeconomic stability was ensured till 2047 from existing levels of $300 billion.

The Viability Gap Fund (VGF) would be established whereby a public-private partnership would be developed to execute development projects with the participation of the private sector. All departments devolved under the 18th Amendment would be abolished at the federal level.

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Gold prices in Pakistan see record increase

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Pakistan’s gold prices surged by an astounding Rs3,500 on Saturday. The cost of 24-karat gold increased to Rs220,300 per tola as a result of this increase in gold prices across the nation.

The price of 10 grammes of 24-karat gold increased correspondingly, according to dealers, by a significant Rs3,001, to trade at Rs188,872. In a similar vein, 10 grammes of 22-karat gold experienced an increase in price, trading at Rs173,132.

These oscillations have a strong correlation with shifts in the US dollar’s value, demonstrating the complex interplay between gold prices and exchange rates. This emphasises how local gold prices are impacted by events related to the global economy.

Additionally, the price of 24-karat silver increased by a record Rs30 to trade at Rs2,600. The price of gold increased significantly on a global scale as well, by $36, to $2,103 per ounce.

It’s important to understand that fluctuations in the worldwide market can cause considerable fluctuations in gold rates in Pakistan throughout the day. The gold rates that are offered are obtained from reliable sources, mostly situated in Karachi and Multan.

It is recommended that individuals seek the advice of nearby gold merchants and jewellers for the most precise and current information on gold prices.

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The gold price in Pakistan today

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According to the All Sindh Sarafa Jewellers Association, the price of 10 grammes of 24 karat gold increased by Rs772 to Rs184,928 from Rs184,156, while the price of 10 grammes of 22 carat gold increased to Rs169,517 from Rs168,810.

These oscillations are strongly correlated with shifts in the US dollar’s value, demonstrating the complex interplay between gold prices and exchange rates.

This emphasises how local gold prices are impacted by events related to the global economy.

On the other hand, the cost of 24-karat silver was constant at Rs 2,570. Globally, too, the price of gold increased somewhat by $9 to $2,057 per ounce.

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Pakistan receives a $2 billion loan from China, according to the finance minister

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The $2 billion loan was one year ahead of schedule and became due in March. According to reports, Beijing had informed Islamabad of the decision.

The International Monetary Fund granted Pakistan’s cash-strapped economy a $3 billion standby arrangement last summer, but the country is still battling to recover from the financial crisis.

According to ratings firm Fitch, one of the top concerns confronting the next administration would be obtaining funding from bilateral and multilateral partners due to Pakistan’s precarious foreign situation, as was stated last week.

This event occurs one month after Anwaar-ul-Haq Kakar, the acting prime minister, asked for a $2 billion loan to be rolled over for a year in a letter to his Chinese counterpart.

In his letter, Kakar also expressed gratitude for China’s efforts to lessen Pakistan’s load

of foreign payments.

It is to be noted that Pakistan acquired safe deposits of $4 billion from China to address the balance of payments issue.

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