Headed by its Director General Ehtesham Rashid, the Debt Policy Coordination Office prepared the statement in the light of the FRDL
Before the amendments in the FRDL
law, the government was bound to keep public debt below 60% of the total size of the economy.
The Federal government has completed seven fiscal years since the implementation of FRDL in June 2005.
In the following paragraphs we will evaluate FRDL act-2005.
It is therefore imperative that FRDL may also be framed for the provincial governments.
The FRDL is silent about the absolute fiscal deficit which otherwise is the source of concern for fiscal policy makers.
Thus the first condition of FRDL is not met till the fiscal year 2010-11.
The FRDL -2005 does not consider the fiscal deficit as its objective; therefore, the targets of debt to GDP ratios for coming years are not seemed to be realistic.
Under the FRDL Act of 2005, it was legally binding for the federal government to limit the overall public debt to GDP ratio to 60%.
Now, the IMF and the World Bank want to airtight the law that will stop the finance ministry from borrowing beyond the limit prescribed in the FRDL Act of 2005, said the sources.
Amendment in FRDL
be got approved from senate and no effort be made to get it approved from National Assembly by declaring it money bill.
According to the FRDL
Act (2005), the government must achieve a public debt-to-GDP ratio of 60 percent by end FY13.