The Pakistan Peoples Party-led government obtained domestic and foreign loans worth Rs10.3 trillion over the past five years, highlighting the precarious state of the country’s economy, the Senate was told on Tuesday.
These loans have propelled the country’s debt and liabilities to an unprecedented Rs15.2 trillion, equal to 68% of gross domestic product (GDP).
According to the Fiscal Responsibility and Debt Limitation Act of 2005, the total debt should not exceed 60% of GDP.
In response to a written question by Balochistan National Party (Awami) Senator Naseema Ehsan, the Ministry of Finance revealed that the PPP-led government secured loans worth Rs8.6 trillion domestically between 2008 and 2013 from the State Bank of Pakistan, National Savings Schemes, commercial banks and other local institutions.
In addition, eight countries and international financial institutions also lent Pakistan Rs843 billion during this period. The government was also forced to obtain a further Rs754 billion from the International Monetary Fund to pump into the ailing economy.
Revealing more details on the foreign debt, the ministry said that Pakistan secured maximum loans worth $4.39 billion from the Asian Development Bank from 2008 to 2013. The International Development Association – World Bank’s fund for the poorest – loaned $3.21 billion. China remained the third largest lender, giving loans worth $2.91 billion.
The previous government borrowed $1.58 billion from the Islamic Development Bank during its tenure.
Kuwait chipped in with $94.2 million, Germany $67 million, Italy $39.3 million and France $38.8 million. The International Bank for Reconstruction and Development gave $350.7 million and the International Fund for Agricultural Development provided $81 million.
Additionally, the Organisation of Petroleum Exporting Countries Fund for International Development lent $32.2 million and $1 million was lent by ECO TD Bank.
The ministry of finance also stated that the domestic debt contains instruments offered to retail investors as well as market debt (treasury bills, Pakistan Investment Bonds, Ijara Sukuk) which are tradable instruments with an active secondary market.
It also informed the Senate that the Federal Board of Revenue collected Rs6.8 trillion in the form of various taxes and duties from 2008 to 2012.
Meanwhile, the ministry of finance did not comment on the issue of missing Nato containers as the matter was sub judice in the Supreme Court. However, it informed the Senate that the National Accountability Bureau was investigating the case.
Published in The Express Tribune, April 17th, 2013.
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