As a matter of fact, much of the loans are utilised to repay previous loans which results in a spiral of debt
ISLAMABAD: The Asian Development Bank and the government of Pakistan have recently signed accords worth millions for infrastructural development in Sindh and Peshawar. The funds will be primarily utilised for a massive upgrade of the transportation system, which will have a multi-fold effect on the economy. Not only will the projects improve the outdated transportation system of the city but also offer better investment and business incentives to investors.
However, the money will be given as loans repayable over a period of three years. With a staggering figure of $74.2 billion payable as external loans as of 2016 and Moody’s negative rating for fiscal strength, the government is set to gulp down another chunk of billions only to use a proportion of the amount for repayment of already overdue loans while straining the economy further. As a matter of fact, much of the loans are utilised to repay previous loans which results in a spiral of debt. This points at the policy gaps within economic planning, where borrowings are not being equated with increased economic activity, a favourable balance of trade and GDP figures.
Saif Kamil
Published in The Express Tribune, September 15th, 2017.
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