ISLAMABAD: The Ministry of Finance has blamed the COVID-19 pandemic over a negatively impacted economy of Pakistan.
The Ministry of Finance said that the coronavirus pandemic negatively impacted the economy and slowed down the reforms program of the government which resulted in an increase in debt-to-GDP ratio. The statement comes after the statistics shared by the State Bank of Pakistan (SBP) showing the total public debt-to-GDP ratio has increased from 86.1 percent in June 2019 to 87.2 percent in June 2020.
Pakistan’s economy suffered from COVID-19 out breakthrough various channels like reduction in revenue and increase in expenditures, declines in domestic and global demand, lower tourism and business travel, trade and production linkages and supply disruptions, etc. Resultantly, the Debt-to-GDP ratio has increased due to the sharp decline in growth and the increase in the budget deficit primarily, due to COVID-19 related expenditures, during the last four months of FY20.
In view of the foregoing, it is expected that the government will be able to bring back the Debt-to-GDP ratio on a clear downward path over the medium term through an increase in revenues and fiscal discipline. It is reiterated that the government plans to run a primary surplus, maintain low and stable inflation, and promote measures that support higher long-term economic growth.
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