ISLAMABAD: During first nine months of the current fiscal year, according to Economic Survey 2018-19, the government issued fresh guarantees aggregating to Rs168 billion, while, outstanding stock of government guarantees as at end March 2019 has amounted to Rs1.265 billion.It says the share of rupee guarantees accounted for 91 per cent of the total guarantees stock as at end March 2019. The volume of new government guarantees issued during a financial year is limited under Fiscal Responsibility and Debt Limitation Act which stipulates that the government shall not give guarantees aggregating to an amount exceeding 2 per cent of the GDP in any financial year, including those for rupee lending, rate of return, outright purchase agreements and other claims and commitments provided the renewal of existing guarantees shall be considered as issuing a new guarantee. The limit of 2 per cent of the GDP is applicable to guarantees issued both in local and foreign currencies.During July-March 2018-19, government of Pakistan issued fresh and rollover guarantees aggregating to Rs168 billion or 0.4 percent of GDP. Those issued against commodity operations are not included in the stipulated limit of 2 per cent of GDP as the loans are secured against the underlying commodity and are essentially self-liquidating and thus should not create a long term liability for the government.Their quantum depends on the supply-demand gap of various commodities, their price stabilization objectives, volume procured, and domestic and international prices. The guarantees were issued against the commodity financing operations undertaken by the TCP, PASSCO, and provincial governments.
from The News International - National http://bit.ly/2Zido5v
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