KARACHI:Pakistan economy is facing a tsunami of bad news as 42% of its foreign debt, around $50 billion, is due this year. Around $30 billion is due between July and September, of which $8.3 billion will need to be in foreign currency, depleting 40pc of the country $21 billion in foreign exchange holdings.
Pakistan’s high level of public debt, with a large portion financed through short-term instruments, does make the sovereign’s ability to meet their financing needs more sensitive to market conditions, financial experts said.
In 2013, a $6.6 billion loan from the International Monetary Fund (IMF) was used to make payments for previous outstanding loans and avoid a Greece-like crisis. Since then, the projected debt on the country due by end-2016 has grown by 79 percent. At Rs 13 trillion, 77 percent of the budget is already allocated for loan repayments this year. A concurrent challenge is meeting IMF demands to privatise state-owned concerns. Last year in November government imposed new taxes worth Rs 40 billion to meet the fiscal deficit.
A financial expert in Houston, Fazal Ahmad, said the financial managers in the government were still not able to utilise maximum allocations of annul budget of the country meant for development for the last many years.
Only a small portion of total amount of allocated budget is used during every fiscal year while most of the funds go in deferred or lapsed every year, he opined.
Despite improvement in the country’s security situation and the economy growing at an eight-year high, the government has failed to attract foreign investment.
All Pakistan Business Forum (APBF) President Ibrahim Qureshi said that the Punjab government had failed to utilise the budget of Annual Development Programme (ADP). During current fiscal year, the Punjab government could not spend around 40 percent of the ADP while the fiscal year 2015-16 was nearing to close. The funds earmarked for agriculture, education and health sectors would be used in the Orange Line project, he commented. He said despite high taxes in every sector, historical deficit of Rs 114 billion is an ample proof of inefficiency of the economic managers of the Punjab government.
Around Rs 24 billion were allocated for health in the budget for the 2015-16 fiscal, but only Rs 3.5 billion were spent, he explained.
The total debt of Punjab has crossed Rs 625 billion, whereas the amount of interest on payment of loans annually has crossed Rs 125 billion. He remarked that Rs 50 billion Kisan Package was defrauding and misleading the farmers.