‘Economic indicators point to improvement’

Fawad Chaudhry says PTI govt inherited elevated levels of debt servicing

ISLAMABAD:

When the current government came to power, Pakistan was facing daunting challenges such as a high current account deficit, which has now been curbed significantly due to sound fiscal policies, said Federal Minister for Information Fawad Chaudhry.

Briefing the media on Wednesday, he said that at present, economic indicators were pointing towards improvement in the national economy despite the Covid-19 pandemic.

“All high-frequency data shows improvement in the economy and growth rate is being predicted at about 3.94%,” he said.

He added that the Pakistan Tehreek-e-Insaf (PTI) government had inherited elevated levels of debt servicing of over $10 billion per year. Higher external borrowing ($49.76 billion), especially short-term and expensive commercial loans ($17 billion), by the previous government was the prime reason behind the surge in debt servicing, he said.

During the current fiscal year, the government had to repay about $10.36 billion on account of external loans including the principal and interest payments while inflows were estimated at $14.37 billion, he pointed out.

He said that the government returned $7.52 billion including $6.31 billion in principal loans and $1.21 billion in interest payments in the first 10 months of fiscal year 2020-21.

“In order to fulfil its obligations, the government borrowed $10.5 billion as programme and project loans in the same period,” he said. “Hence, the net inflow of external loans is $2.98 billion.”

In addition, the government also returned $2 billion to Saudi Arabia during the current fiscal year, which further curtailed the actual net inflow to $0.98 billion only.

It may be noted that budgetary support helps the government in bridging the financing gap and provides fiscal space to make necessary expenditures.