Senator Syed Shibli Faraz of Pakistan Tehreek-e-Insaf (PTI) lambasted the government in Senate on Thursday for non-stop increase in external and domestic debt, saying flawed state policy brought the country to a stage where loan servicing is literally becoming an uphill task.
Through a calling attention notice, the PTI senator declared the consistent borrowing of an ‘insatiable appetite’ of ruling government to bring the country under heavy debt by intentionally violating ‘The Debt Limitation Act, 2005’ which restricts public debt to 60 per cent of GDP.
Senator Faraz, a former banker, said that government is planning to borrow Rs 1.6 trillion more loans in the current quarter (January to March), which he said would be disastrous for the country. “I’m telling the government to think seriously as the country can not afford any further loaning, and if this borrowing spree is continued, it will become very difficult rather impossible to service the loans,” he warned in an unequivocal terms.
The PTI lawmaker also flayed the economic managers of Sharif administration for their failure to levy direct taxes, and said it neither had writ nor will, adding a huge chunk of budget is eaten up by debt servicing, which also leads increase of expenditures.
He said no foreign direct investment was coming due to poor economic policies of the current regime, adding every single Pakistan who had to pay a debt of Rs 37,000 is now liable to pay Rs 120, 000 which reflects the incompetence of those dealing with the economy of country with hollow claims of putting things on right track.
Senator Faraz also raised questions over the transparency of China-Pakistan Economic Corridor (CPEC) project, saying that the terms and conditions on which loans are being obtained must not be kept as a guarded secret as it would create doubts.
Responding to the calling attention notice on behalf of Finance Minister Ishaq Dar, Minister for Law and Justice Zahid Hamid said that Pakistan’s net public debt to GDP ratio increased marginally by 1.1 per cent during the last three years of the present government as compared with the increase of 6.7 per cent witnessed during previous government’s tenure and 6.8 per cent increase in the global debt to GDP ratio in last three years.
He said that major debt sustainability indicators had improved in the last three years, adding refinancing risk of the domestic debt portfolio was reduced through lengthening of the maturity profile at the end of June 2016.
“The percentage of domestic debt maturing in one year was reduced to 51.9 per cent compared with 64.2 per cent at the end of June 2013…the exposure to interest rate risk was also reduced as the percentage of debt re-fixing in one year decreased to 44.4 per cent at the end of June 2016 compared to 52.4 per cent at the end of June 2013,” he added.
Hamid stated that the share of external loans maturing within one year was equal to around 31.9 per cent of official liquid reserves at the end of June 2016 as against around 68.5 per cent at the end of June 2013, indicating improvement in foreign exchange stability and repayment capacity.
According to the minister, the present government has repaid around US $12 billion of external debt till end of June 2016, which was mainly related with the borrowings of the previous government. He said despite these heavy repayments, the Forex reserves stood at US $24 billion up from US $11 billion at the end of June 2013. The statistics which the law minister read out showed that the net domestic debt increased from Rs 9.49 trillion in 2013 to Rs 13.17 trillion at the end of fiscal year ending June 2016 while external debt increased from $48.1 billion (Rs 4.8 trillion) to $57.7 billion (Rs 6.05 trillion).
As such, the total gross public debt rose to Rs 19.68 trillion at the end of fiscal year 2016 from Rs 14.3 trillion in 2013. Therefore, the gross public debt that stood at 64 per cent of GDP in 2013 went up to 66.5 per cent.
Opposing an adjournment motion moved by Mian Ateeq Sheikh, Zahid Hamid said that no final decision had yet been taken on launching an amnesty scheme for those holding wealth abroad for bringing it back to Pakistan without the fear of penalty on payment of nominal tax on the declared asset.
“Some trade bodies had asked for an amnesty scheme and the government assured them that it would be considered,” he added. To this, chairman Senate Raza Rabbani recalled a statement by finance minister Ishaq Dar in which he had claimed that the government was mulling a proposal to launch amnesty scheme. The chair held the motion in order and fixed it for a two-hour debate on Tuesday. Atiq Sheikh while speaking on the motion had feared that the people who had transferred their wealth abroad would get a legal way to bring it back to Pakistan under the scheme.