In an unusual departure before the end of her approximately six-month tenure, interim Finance Minister Dr. Shamshad Akhtar made a comparative assessment, asserting that her management of domestic and external debt surpassed that of her predecessor, Ishaq Dar, during the PDM-led coalition government. This seemed to advocate for her continuation in office.
“The Ministry of Finance stated, ‘Borrowings during the interim government’s term have been lower compared to the previous period,’ despite inheriting more challenging circumstances.
“Offering a comparison between the six and a half months of the Shehbaz Sharif government (February 1 to August 16, 2023) and the five and a half months of the subsequent period (August 17, 2023, to January 31, 2024), the statement from the interim minister’s office asserted outperformance over the prior administration.
“It explained that most of the borrowing in the final months of the interim period was to fulfill debt repayment obligations, focusing on fiscal consolidation measures such as revenue enhancement and expenditure rationalization.
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“The Ministry highlighted that Dr. Shamshad Akhtar added $300 million to foreign loans, compared to $3 billion under Dar’s administration.
“Inherited with a policy rate of 22%, the highest since 1972, the interim government aimed to tackle this issue, focusing on extending the maturity of government securities and reducing borrowings from government securities through the banking sector.
“Furthermore, the interim government successfully retired short-term Treasury Bills (T-Bills) amounting to Rs1.6 trillion, contributing to the reduction of the government’s gross financing needs.
“In terms of domestic borrowing, the interim government shifted towards long-term debt securities to finance the fiscal deficit, leading to an increase in the average time to maturity of domestic debt.
“On the external front, the share of external debt in total public debt was reduced, helping to mitigate foreign currency risk in alignment with the Medium-Term Debt Management Strategy (MTDS) FY23-FY26 targets.
“Highlighting the need for prudent debt management, the Ministry advocated for breaking the nexus with the banking sector to avoid overburdening banks with public sector debt and reduce private sector crowding out.