ISLAMABAD - Pakistan’s total public debt grew to Rs 18,467.3 billion by end of December 2015.

The total public debt was Rs 14,318.4 billion, comprising external public debt of $48.13 billion (Rs 4,796.5 billion) and domestic public debt of Rs 9,521.9 billion in 2013. During the period from July 2013 to December 2015, the total public debt grew to Rs 18,467.3 billion of which the external public debt is $53.36 billion (Rs 5,589.2 billion) while domestic public debt is Rs 12,878.1 billion. There is a net increase of Rs 4,148.9 billion in total public debt, inclusive of $5.23 billion of external debt.

A meeting of the Monetary and Fiscal Policies Coordination Board, held under the chairmanship of Finance Minister Ishaq Dar, which discussed the economic situation of the country, was attended by Commerce Minister Khurram Dastgir, Finance Secretary Waqar Masood, State Bank of Pakistan Governor Ashraf Wathra and former SBP Governor Dr Ishrat Hussain.

The finance minister highlighted that Monetary and Fiscal Policies Coordination Board is an important body which meets on quarterly basis to review the current economic situation to bring consistencies in monetary, fiscal and exchange rate policies and among macro-economic targets of growth, inflation and fiscal, monetary and external accounts.

The finance minister stated that due to better policies of the government, 4.24 percent GDP growth was achieved in 2015, which is the highest growth during last 7 years. “We have targeted our growth at 5.5 percent for 2016. Early indicators of the commodity producing sector suggest that the economic growth is picking up modestly.”

The growth momentum in large-scale manufacturing (LSM) continued to remain strong duly supported by better energy supplies, lower commodity prices and accommodative polices. The sector was able to record a growth of 4.12 percent during Jul-Jan FY 2016 compared to last year growth at 2.15 percent. The year-on-year growth in January 2016 was recorded at 5.0 percent compared to 1.52 percent last year.

Low prices of international commodities, particularly oil and subdued monetary expansion along with contained budgetary borrowings from SBP, coupled with better supply of commodities in the market despite rains and floods, resulted in the decline of CPI inflation during July-Feb 2015-16 at 2.48 percent compared to 5.45 percent. The other inflation indicators such as food, non-food, core, SPI and WPI are also lower compared to last year.

The external sector is also stable. Current account has posted surplus of $157 million in February 2016 and during the period Jul-Feb, 2015-16, current account deficit narrowed to $1.859 billion compared to $1.947 billion last year on account of stable exchange rate, remarkable reserves and healthy growth of remittances despite high base effects of last year. Workers’ remittances have surged by 6.1 percent to reach 12.714 billion in the first eight months compared to $11.986 billion of last year. The foreign exchange reserves which were at the lowest level in February, 2014, have increased to $20.508 billion as on March 21, 2016. Pakistan’s foreign exchange reserves are expected to exceed $ 22 billion.

The finance secretary gave a detailed briefing on economy. The meeting was told that macroeconomic indicators continued to show a positive growth while LSM growth is picking up. The industry-specific data shows that a number of sectors performed well during July-January 2016. For example, automobile grew by 31.42%, fertilizers 14.60%, chemicals 11.44%, rubber products 9.83%, non-metallic mineral products 7.64%, pharmaceuticals 6.65%, core and petroleum products 4.85%, food beverages 2.23%, textile 0.95% and cement dispatches increased to 16%. The other positive development is the increase in growth of machinery import by 8%, which shows signs of development activities. Moreover, the electricity and gas supplies also increased by 6 and 4 percent, respectively, over the last year.

The credit to the private sector has witnessed expansion of more than 100% during July to March 4, 2015-16, over the last year. With this trend in expansion of credit to the private sector, it is very likely that the private sector investment will record its first uptick after several years. Similarly, public sector development spending also increased to Rs.700 billion during FY 2016 which will support public sector investment. All monetary aggregates are moving in a comfortable zone.

The FBR revenue is continuously rising. During July-February 2016, it increased by 17.2%. It is expected that there will be steep rise in the coming months.

The meeting was also informed that FDI also improved by 4.8 percent during July-Feb. 2015-16 over last year. In total, the country was able to attract $103 million in foreign direct investment in Feb 2016, up by around 16 percent year on year and by over four times when compared to Jan 2016. The total FDI to date has reached $647.9 million compared to $619.6 million last year.

The capital market performance is remarkable and our PSX index is better than many capital markets of the world.

Moreover, refinancing risk of the domestic debt portfolio was reduced through lengthening of the maturity profile at the end of June 2015. Percentage of domestic debt maturing in one year was reduced to 47 percent compared with 64 percent at the end of June 2013. Exposure to interest rate risk was also reduced as the percentage of debt re-fixing in one year decreased to 40 percent at the end of June 2015 compared to 52 percent at the end of June 2013 and share of external loans maturing within one year is equal to around 28 percent of official liquid reserves at the end of June 2015 as compared to 69 percent at the end of June 2013, indicating improvement in foreign exchange stability and repayment capacity.

The SBP governor told the meeting that the 320 basis point reduction in policy rate has led to doubling of credit disbursement to the private sector in the current fiscal year and a welcome development is the rise in credit disbursement for fixed investment. It appears many firms are expanding their operations by availing fixed investment loan.