AMER SIAL
Former Economic Advisor Ministry of Finance Dr Ashfaque Hassan Khan has warned Pakistan’s foreign debt could balloon to over $ 110 billion by the end of fiscal year 2020 if any corrective measures are ignored.
Addressing a national debt conference arranged by the Policy Research Institute of Market Economy (PRIME) on Saturday, Dr Khan said the Musharraf era ended in June 2008 with an external debt of $ 41 billion. It has increased to $ 61 billion in June 2013 and during Nawaz Sharif government’s first three year has risen by $ 12 billion to reach $ 73 billion.
I was pessimistic when last year we estimated that the external debt would rise to $ 68 billion by June 2016.
However, the Finance Ministry surprised us when it released that foreign debt had risen to $ 73 billion, he said adding, the foreign debt would increase to $ 81 billion by end June 2017 and by end June 2018 it would be $ 90 billion.
The new government would have to seek IMF help for economic stabilisation.
Other than the foreign debt, this government has ingeniously parked Rs 650 billion circular debt and Rs 600 billion commodity financing in fictitious companies, which IMF has also preferred to ignore, even though it is part of expenditure. It is like laying mines for the next government, Dr Khan said.
Stressing for formation of a borrowing policy to avoid expensive program loans from Inernational Financial Institutions (IFI) that are taken just for budgetary support, he revealed that as DG Debt Office he twice attempted to form guidelines for borrowing but his efforts were sabotaged by the Finance Minister Naveed Qamar and Finance Secretary Dr Waqar Masud. “I moved a note two times, and they informed that they have received no file containing the note”, he said.
Pakistan is in quicksand of loans, noted Asad Umar of PTI who said the parliament has no role and is totally irrelevant in the debt policy. “In context of taking loans, neither the parliament was informed nor any approval was sought.”
However, he said the debt burden stems from different areas. One of them is low agricultural and industrial productivity. Agriculture research has less allocation than the urea subsidy set for this financial year. In this scenario, no growth would come in any of the sectors. The government must spend on human resource development and make different sectors competitive.