Growing baggage of back breaking loans 

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Costly and unproductive short term foreign loans are multiplying alarmingly

 

“The more the merrier” seems to be the government’s unabashed motto when holding out the (otherwise much reviled) begging bowl before haughty foreign lenders. Frightening – almost doomsday like – scenarios regarding the growing number and magnitude of our domestic and foreign debt have become a hysterical constant in local media reportage on this subject. But the PML-N leadership is seemingly unmoved by these impassioned pleas and outcries. It remains in a fixed stubborn state of self-denial. Like unsuspecting sleepwalkers, the government leaders continue blithely on the pitfall ridden road that would lead to the blind alley called insolvency. The government’s carefree and rampant borrowing style is beyond comprehension, especially when the means of repayment (mainly exports and remittances) are dwindling by the day. After all, the ubiquitous CPEC is not a magic wand that can make the ill consequences of all our fiscal mismanagement disappear in a trice. At the express-train-speed at which we are borrowing, we would need someone along the lines of the fabled King Midas (whose touch turned everything into gold) to get over our future financial embarrassments.

 

The figures make for bleak reading indeed. Since July 2016 – in a matter of a mere four months – the financial wizards have reportedly added a whopping $2.95 billion to the country’s already ballooning foreign debt. And the fine print is that only a quarter of this amount will be utilised for project loans (that is: for creating value in the form of factories and in providing employment). More than three fourths ($2.2 billion) will be used for non-productive ends – such as budget financing and to satisfy the finance minister’s particular whim – increasing the always shaky FOREX reserves by any means (including floating foreign currency bonds). Even the family silver is a readily saleable commodity in these transactions. In the Sukuk Bonds floated recently to obtain a $1 billion handout, the Lahore-Islamabad motorway was reportedly offered as collateral. So it is out of the IMF fire and into the frying pan of the foreign banks.

1 COMMENT

  1. Besides the hopeless financial situation (loans) described in the Editorial, have heard and read a lot about the burden a common man will have to bear after a definite departure of Mr Dar to his Dubai Empire and soon. Inflation is out of control and families of lower income group are facing hardest of times in their life. Recently it was reported that the Auditor General Pakistan has hardly 10% access into the files of the Ministries which hide a lot of corrupt material. Like says the Editorial, only increasing FE reserves does mean nothing for a poor family. Nothing so far could be done to control flight of Foreign currency out of the country. Neither the tax-base has improved. What next for a common man ?

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