Reducing Government Debt Flotation of Ijara Sukuk Bonds: The Government has proposed to float a large volume of Ijara Sukuk bonds in 2021-22 of Rs 1200 billion. The Federal cabinet has approved the pledging of various physical assets on these bonds. This is an Islamic instrument and should help in broadening the capital market and increase the component of non-bank borrowing. Adherence to FRDL Act: The Ministry of Finance has been publishing its Fiscal Policy Statement and the Debt Policy Statement annually as per the requirements of the FRDL Act. However, the Medium-Term Debt Strategy Statement was not disseminated after the Federal Budgets of 2019-20 and 2020-21. It has recently been released for 2021-22 to 2023-24. Preparation of Realistic Medium-term Budgetary Frameworks: The Medium-term Budgetary Framework(MTBF) needs to be based on realistic projection of macroeconomic indicators. For example, the MTBF of 2018-19 for 2019-20 to 2020-21 was more a statement of unbridled optimism as follows: i) The budget deficit was expected to remain in the range of 6 percent to 7 percent of the GDP. It was high at almost 9 percent of the GDP in 2018-19 and over 8 percent of the GDP in 2019-20. ii) The level of Government debt was expected to come down to 65 percent of the GDP by the end of June 2020. Instead, it stood at close to 80 percent of the GDP. Limitation on Guarantees to PSEs: The Government has been successful in restricting the use of new Government guarantees to less than 2 percent of the GDP annually as per the FRDL Act. However, there is need to issue a statement annually of the quantity of loan guarantees issued to each SOE. Further, the limit must continue to be observed strictly annually to avoid the problem of‘moral hazard’ behavior by the SOEs. 127