Govt debt has increased by Rs1.9 trillion from 2008 to 2013 due to rupee fall.
Between 2008 and 2013, the government debt soared by Rs1.9 trillion due to depreciation of the Pakistani rupee, the Senate was informed on Tuesday.
Minister of State for Education Balighur Rehman, on behalf of the finance minister, was responding to a question forwarded by Senator Sughra Imam of Pakistan Peoples Party (PPP).
Rehman blamed artificial hoarding and speculation for the recent hike in the dollar rate as compared to the Pakistani rupee.
According to the minister, several steps have been taken to arrest the fast appreciation of the dollar value.
“Artificial buying of the dollar is being discouraged and efforts are being made to increase the inflow of dollars into the country,” Rehman said adding that banks and financial institutions had also taken several steps in this regard.
However, former finance minister Saleem H Mandviwalla negated the argument and said that the government had recently printed currency notes worth Rs2 billion – which had led to further depreciation of the rupee.
The ministry also informed the Senate that the US had provided $2.7 billion as financial assistance between 2003 and 2013, and that Pakistan had obtained loans from the World Bank, Asian Development Bank and the International Monetary Fund worth $7.7 billion, $8.2 billion and $9.1 billion, respectively.
To another question, the finance ministry said that all payments related to the government’s expenditure were being made from the Federal Consolidated Fund (FCF), which consisted of revenue receipts, loans and recovery of loans.
For the settlement of the power sector circular debt, Rehman pointed out, three kinds of transactions were carried out including issuance of five-year Pakistan Investment Bonds, deduction at source against government receipts or recovery of loans, and cash payment out of FCF.
The ministry stated that in the budget for 2013-14, the government had planned substantial foreign exchange inflows including funds through the 3G licence fee, proceeds from the privatisation of Pakistan Telecommunication Company Ltd, and loans from multilateral and bilateral sources.
“The timely and full realisation of planned official financial inflows will help build up of foreign exchange reserves and in turn stabilise the exchange rates,” he said.
The finance ministry also informed the Senate that the IMF programme had already been started and the first tranche of $544 million had already been received.
Meanwhile, States and Frontier Regions Minister Abdul Qadir Baloch, on behalf of the minister for industries and production, told the upper house that the government had introduced Telegraphic Transfer Charges Schemes to enhance foreign remittances through the banking system.
“The Pakistan Remittance Initiative was launched with the objective of facilitating and supporting faster, cheaper, convenient and efficient flow of remittances,” he said.
Published in The Express Tribune, December 18th, 2013.
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Hoarding may contribute but the core issue hasn't changed - Pakistan refuses to cut spending and few in Pakistan pay sufficient taxes. Govt, military and judiciary don't have the guts/willpower to cut spending or make everyone pay their fair share of taxes.