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Finance Ministry to fulfill requirements of Fiscal Responsibility and Debt Limitation Act 2005

Finance Ministry to fulfill requirements of Fiscal Responsibility and Debt Limitation Act 2005

ISLAMABAD: The Finance Ministry has taken numerous measures to comply with all the requirements stipulated in the Fiscal Responsibility and Debt Limitation Act 2005. The term fiscal responsibility in financial dictionary is defined as “A balanced budget”. That is a budget wherein expenditures during a given period of time are equal to revenues. The fiscal responsibility also includes a budget in which revenue is greater than the expenditures. Fiscal responsibility is achievable and most of the individuals in their private life practice fiscal responsibility.

Fiscal responsibility at national level implies that a government has a balanced budget and has sufficient revenue to pay for its all expenditures. There would be no overspending if government had a true balanced budget in each period. The economic future of a nation largely depends on the way fiscal responsibility is practiced.

“By the beginning of the current fiscal year, Finance Ministry had partly complied the provisions of the said Act, but now the Ministry is making all out efforts to comply with all the requirements of the Act” a well placed source at Finance Ministry told Customs Today here on Wednesday.

The measures taken by the Finance Ministry to achieve the objectives include the lowering fiscal deficit to 5.5% in 2013-14 which was 8.2% in 2012-13, increasing the revenue mobilization and rationalization of current expenditures.   This resulted in reduced pace of public debt accumulation and improved revenue balance as compared with last fiscal year; with increased external inflows, the government was able to boost its foreign exchange reserves vis-a-vis improving exchange rate of Pak rupee against major international currencies. This contributed in reducing the pace of external public debt in rupee term.

Government was able to reduce the risks associated with its public debt portfolio through re-profiling of its domestic debt portfolio, broadening of investor base by commencement of trading of government debt securities at stock exchanges and mobilization of concessional external debt to retire its expensive domestic debt

The approval and implementation of Fiscal Responsibility and Debt Limitation Act.2005 was meant to provide for elimination of revenue deficit and reduction of public debt to a prudent level by effective public debt management.

The implementation of Fiscal Responsibility and Debt Limitation Act, 2005 was the serious effort by the government to create strong institutional mechanism to restore fiscal discipline at the level of central government. The other objective was to introduce greater transparency in fiscal operations of the central government. The Act has bound the Federal government to take all appropriate measures to eliminate the revenue deficit, to reduce total public debt and maintain it within prudent limits thereof.