20000130

Body set up for

debt reduction,

management

ISLAMABAD: An 11-member committee has been constituted for debt reduction and management here on Saturday with Dr Pervez Hassan, former Chief Economist, World Bank as its chairman.

Committee members include Moeen Afzal, Secretary General Finance; Dr Ishrat Hussain, Governor, State Bank of Pakistan; Javed Akram, Secretary, Economic Affairs Division; Fazlullah Qureshi, Secretary Statistics Division; Fateh M. Chaudhri, Honorary Adviser; Bashir Ahmed, Chairman, Islamic Investment Bank, (Peshawar); Khurshid K. Marker, Chairman, Merck Marker (Karachi); Dr Ayesha Ghous Pasha, Deputy Managing Director, Social Policy and Development Centre (Karachi); Dr Aliya H. Khan, Assistant Professor, Department of Economics, Quaid-i-Azam University, and Dr Ashfaq Hasan Khan, Member/Secretary, Economic Adviser, Finance Division.

According to a Finance Division press release, the main task of the committee will be to assess Pakistan's debt and analyse the evolution of public debt and external debt problems both with respect to the impact of exogenous factors and domestic policy and decision-making processes.

It will also ascertain their impact on economic growth and macro-economic management with special reference to factors underlying the growth in debt burden as measured by indicators such as ratios of debt to GDP, public debt to government revenues, interest payments to government revenues, foreign debt and freign debt service to foreign exchange earnings.

The Committee will deliberate on the impact of high public debt interest payments on government development and social spending besides discussing implications of large contingent liabilities of the government for future debt and fiscal management and consequences in near term of large gross external borrowing requirements for balance of payments management.

The Committee will also review the existing framework for debt contracting and evaluate the present capacity of debt management identifying weaknesses and shortcomings, with special reference to, "present guidelines, if any, on internal and external debt".

It will also review system of debt accounting and statistics, respective institutional responsibilities of the Finance, Economic Affairs and Planning Divisions of the GoP and the State Bank of Pakistan, existing procedures for tracking contingent liabilities of the federal government.

The Committee will recommend medium and long term goals for the reduction of burden of public as well as external debt in order to bring them down to sustainable levels and outline a debt management strategy to achieve these goals without sacrificing economic growth unduly.

In this connection, the Committee will pay special attention to the need of consistency between macro-economic framework and borrowing plans, the role expanded exports and government revenues can play in decreasing debt burden, the contribution privatisation revenues can make to reduce outstanding debt.

The Committee functioning will cover as well the traditional external debt relief that will be needed during 2001-2005 to deal with the large over hang of external debt payments, maintain an adequate level of imports and to adquately build up foreign exchange reserves.

It will specify the institutional arrangemtns for a debt management system which will help implement the government strategy, monitor the goals on debt reduction and contribution to an efficient use of externally borrowed resources.

For the purpose the Committee will outline the allocation of responsibilities for debt management between Ministry of Finance, Planning and Economic Affairs and the State Bank.

It will outline as well, the organisational structure of the Debt Management Bureau and its personnel and automation needs.

The Committee willl prepare an interim report within three to four months, focusing on policy issue such as goals of debt reduction, consistency with macro-economic framework and need for additional external debt relief.

The final report will articulate the policy issues and provide guidance for the future institutional framework and will submit its report to the Cabient for consideration.ÑAPP