Politics over economic situation of the country continues in Upper House of parliament with opposition parties trying their bet to portray a negative impact of the economy and the ruling members not only defending their economic policies but also resting the blame of mismanagement on previous governments.
In Senate, Pakistan Peoples Party played an active role in the opposition and its leader Sherry Rehman, through a calling attention notice, said the country was running through excessive debt and begging. She also claimed that ‘revolutionary government’ totally failed to achieve any revenue collection target. In the mini-budget, she said there was no relief for common people and the prices of power, gas and petroleum products had already increased by the government. Sherry said it was not a good sign that the government could not balance its books even after presenting two mini budgets. She said if the government has any plan to go to IMF then why it delayed it. The PPP leader regretted that the government could not share the exact data with parliament about economic condition of the country. Like Prime Minister Imran Khan, the federal finance minister Asad Umar also could not wish to come to Senate, she regretted.
Rehman said, “Our external and domestic debt of Rs. 36 billion, which was previously Rs. 10 billion, is piling up on a daily basis. Our domestic debt has risen by 5.5% since June 2018 while external debt has risen by 17%. Now, the government has resorted to borrowing Rs.400 billion from Islamic banks to ease circular debt pressures. This is what the kashkol sarkar has done to Pakistan in seven months”.
Responding over the calling attention notice of Sherry Rehman, Minister of State for Revenue Hammad Azhar said the government was taking concrete steps to take the economy on the right path by enhancing exports of the country. He expressed the confidence that increase in export and decrease in imports would be witnessed in January’s statistics.
He also said current account and trade deficit would be reduced due to prudent policies of the government. Azhar said circular debt increased from 400 to 1,400 billion rupees in the time of previous government. The Minister of State said domestic and external borrowing was marginally less as compared to the last year.
Senate Standing Committee on Interior presented interim report regarding Sahiwal incident in which four people were killed by Counter Terrorism Department (CTD). The report recommended for the improvement in the Criminal Justice System and proposals to avoid recurrence of any such incident in future. It also recommended proposing a welfare plan for the children of the victim family.
The report also mentioned that all stakeholders have expressed reservations over the JIT including the Senate Interior Committee members demanding a judicial commission to probe the Sahiwal incident.
Pakistan’s debt capacity weakening, NA told
Pakistan’s external debt bearing capacity has further weakened last year, as except for one all external debt sustainability indicators have deteriorated, notably the foreign exchange reserves that are now sufficient to cover only 17% of the country’s external debt and liabilities.
The government on Thursday informed the National Assembly about marked deterioration in Pakistan’s external debt sustainability levels. This came amidst a weakening capacity of Debt Policy Coordination Office which is now run on an ad-hoc basis by a person whose contract is also expiring next month.
Pakistan’s external debt in percentage of foreign exchange reserves also increased to the six years highest level. But the cost of external debt servicing in percentage of foreign exchange earnings slightly decreased.
In its Debt Policy Statement 2018-19, which the Finance Ministry submitted to the lower house of parliament, the government said informed the house that during the last fiscal year the country’s external debt increased at a more rapid pace than its foreign exchange earnings.
The Debt Policy Statement confirmed that the country was in violation of the Fiscal Responsibility and Debt Limitation Act of 2005 that binds to restrict the overall budget deficit to 4% of the GDP. The government also breached the threshold of limiting debt to below 60% of the GDP.
The external debt increased to 130% of Pakistan’s total foreign exchange earnings by the end of fiscal year 2017-18, showing that Pakistan’s debt-bearing capacity has weakened. It was consecutive third year when the ratio slipped further. In fiscal year 2015-16 year the ratio was 110%.
Similarly, external debt as percentage of foreign exchange reserves alarmingly increased to 430%, reflecting the adverse impact in decline in the reserves due to growing current account deficit. This ratio was 290% in fiscal year 2016-17, which within one year jumped to six years high level.
Published in Daily Times, February 1st 2019.
