‘Inevitable’ currency devaluation led to the highest external deficit: Hammad

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ISLAMABAD: Federal Minister for Economic Affairs Hammad Azhar says the country’s debt to GDP ratio is projected to decline in the coming years.

In a series of tweets on Saturday, he said Pakistan’s public debt increased from “72% to 84% of GDP” during the fiscal year 2018-19 as close to half this increase came from devaluation.

“The devaluation became inevitable due to flawed econ[omic] policy of the previous govt that led to highest external deficits, depleting forex reserves, highest debt servicing,” the minister said.

“Also, Rs1.2tr of cash reserve was creating by one-time debt before moving towards a policy of zero borrowings from SBP.”

Hammad Azhar said debt-to-GDP ratio is projected to decline in the coming years with currency stabilizing and deficit receding.

“Statistically masking or undervaluing the actual value of debt by an over-valued exchange rate, artificially kept afloat by depleting forex reserves & more debt is not sustainable,” he added.

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