Paying off debts biggest concern, says finance ministry

The Ministry of Finance has said debt servicing will pose significant challenges as over 91 per cent of all expenses are interest payments. In a monthly report on the state of economy, the ministry expressed the hope that nascent economic activities would remain better throughout the fiscal year. “On the expenditure side, higher markup payments will continue to pose significant challenges for fiscal consolidation efforts,” said the Monthly Economic Update & Outlook report for October released by the ministry’s Economic Advisor’s Wing on Tuesday. In her foreword, caretaker Minister for Finance Dr Shamshad Akhtar also called the cost of servicing public debt a “primary concern”. The 22pc policy rate of the State Bank of Pakistan and the weaker rupee was fueling the rise in servicing costs, she said. “Debt servicing costs increased 45pc in Q1 to Rs1.4 trillion. The minister claimed that despite high servicing costs, overall expenditure didn’t grow exponentially due to “a prudent reduction in untargeted subsidies and a reduction in spending on new projects and schemes under the PSDP”.