Federal Government Implements New Fiscal Rules for Debt Reduction

The federal government has recently introduced new fiscal rules aimed at decreasing its debt servicing expenses. One of the key strategies involves accessing the significant funds held by various ministries and departments in commercial banks. These rules mandate that the State Bank of Pakistan (SBP) will conduct daily sweeps to transfer the cash reserves of government entities from commercial banks.

This initiative is designed to optimize the utilization of public funds and minimize the government's reliance on external borrowing for debt servicing. By tapping into the trillions of rupees held by ministries, divisions, executive offices, and attached departments, the government aims to reduce its interest payments and overall debt burden.

Furthermore, the daily cash sweeps by the SBP will ensure that idle funds are actively utilized for government expenditures, infrastructure projects, and other priority areas. This proactive approach is expected to enhance financial efficiency and streamline the management of public finances.

The implementation of these new fiscal rules signifies a strategic shift towards leveraging internal resources to address the government's debt servicing challenges. By unlocking the substantial funds held in commercial banks, the federal government aims to achieve cost savings and improve fiscal sustainability in the long run.