ISLAMABAD: While a 12-member Commission of Inquiry constituted by Prime Minister Imran Khan three months back to investigate the use of loans taken from 2008 to 2018 is quietly working, a deep look at the complete picture of the borrowing and Gross Domestic Product (GDP) during this period as per official statistics may be instructive. According to the officially released figures of the State Bank of Pakistan (SBP), Pakistan’s external debt and liabilities stood at $46.161b in 2008 while they climbed up to $95.342b in 2018, showing an increase of $49.181bn in ten years when the Pakistan People’s Party (PPP) and Pakistan Muslim League-Nawaz (PML-N) ruled with five-year term each. Thus, there was an increase of 106.54pc in foreign debt during the PML-N rule compared to the 2008 grand total.
The SBP data shows that there was a massive raise in GDP of Rs23,759b (current market price) in these ten years. In 2008, the GDP stood at Rs10,637b, Rs22,385b in 2013; Rs25,168b in 2014, 27,443b in 2015; Rs29,075b in 2016, Rs31,962b in 2017 and Rs34,396bn in 2018. Thus, there was an increase of 223.36pc in the GDP from 2008 to 2018. The growth rate was 5.8pc when the last government completed its tenure.
The Organisation for Economic Cooperation and Development defines GDP as an aggregate measure of production equal to the sum of the gross values added of all resident and institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the value of their outputs).
Pakistan’s external debt & liabilities were $60.899b in 2013, $65.268b in 2014, $65.17b in 2015, $73.945b in 2016, $83.477b in 2017 and $95.342b in 2018. They comprised public external debt of $71.344b, foreign exchange liabilities of $4.996b, public sector enterprises (PSEs) of $2.846b, banks of $4.452b, private sector $9.24b and debt liabilities to direct investors – intercompany debt – of $3.857b.
Pakistan’s debt and liabilities as percent of GDP were 62.9 in 2008; 73 in 2013, 72.4 in 2014; 72.3 in 2015; 77.6 in 2016; 78.6 in 2017 and 86.9 in 2018.
The dollar-rupee parity was Rs68.3 a dollar in 2008; Rs99.1 in 2013; Rs98.8 in 2014; Rs101.8 in 2015; Rs104.8 in 2016; Rs104.9 in 2017; and Rs121.5 in 2018. It is now Rs156.6.
According to the SBP data, the total debt and liabilities – government domestic debt, government external debt, debt from International Monetary Fund (IMF), external liabilities, private sector external debt, PSEs external debt, PSEs domestic debt and commodity operations – stood at Rs6,690.5b in 2008; Rs16,338.2b in 2013; Rs18,214b in 2014; Rs19.849b in 2015; Rs22,577b in 2016; Rs25,114b in 2017 (provisional); Rs29.892bn (or around Rs30 trillion) in 2018. The figure mentioned in the notification establishing the Inquiry Commission is Rs30,846b of September 2018. As per the calculation, the total debt and liabilities shot up by 346.1pc.
Pakistan’s total debt and liabilities have now risen to Rs40 trillion from Rs30 trillion in September 2018. They had increased to Rs16 trillion from Rs6 trillion in five years of the PPP government from 2008 to 2013. During the PML-N tenure, they had gone up to Rs30 trillion from Rs16 trillion from 2013 to 2018.
However, the PML-N cites the figure of Rs24,952.9b (also quoted by the prime minister a few weeks back) as the debt it left, which includes government domestic debt of Rs16,416.3b; government external debt of Rs7,795b and debt from IMF of Rs740.8b but excludes Rs622.3b of external liabilities, Rs1,639.3b of private sector external debt, Rs324.6b of PSEs external debt, Rs1,068.2b of PSEs domestic debt, Rs819.7b of commodity operations and Rs465b of intercompany external debt from direct investor abroad. Thus, the increase in public debt left in 2018 rose by 307.25pc compared to the 2008 figure of Rs6,127.1b.
The SBP explained that external liabilities include central bank deposits, SWAPs, allocation of Special Drawing Rights (SDR) and non-resident LCY [local currency] deposits with central bank. Commodity operations include borrowing from banks by provincial governments and PSEs for this purpose.
The debt of the government stood at Rs5,650.8bn in 2008; Rs13,457.3b in 2013; Rs14,623.9b in 2014; Rs15,986b in 2015; Rs17,823.2b in 2016; Rs19,635.4b in 2017; and Rs23,051.5b in 2018.
It was elaborated by the SBP that as per the Fiscal Responsibility and Debt Limitation Act 2005 amended in 2017, total debt of the government means the debt of the government (including the federal and provincial governments) serviced out of the consolidated fund and debts owed to the IMF less accumulated deposits of federal and provincial governments with the banking system.
Similarly total debt and liabilities (excluding private sector external debt) was Rs6,562b in 2008; Rs15,872b in 2013; Rs17,713b in 2014; Rs17,713b in 2015; Rs19,310b in 2016; Rs23,930b in 2017; and Rs28,252b in 2018.
Likewise, total public debt – government domestic debt, government external debt and debt from the IMF – stood at Rs6,127b in 2008; Rs14,291b in 2013; Rs15,991b in 2014; Rs17,380b in 2015; Rs19,676b in 2016; Rs21,408b in 2017; and Rs24,952b in 2018.
As per the latest statistics, the debt-to-GDP ratio has now gone up to 104% from 80% in September 2018. Google search shows Japan, one of the most developed and most influential countries in the world, is also the most indebted country in the world, carrying a substantial debt roughly 233% of GDP on its shoulders. The US federal government’s debt load has hit another milestone: It’s now a record $22 trillion in nominal terms. That’s $67,000 for every man, woman and child living in the US, and it is up $2 trillion since President Donald Trump took office in 2017. The US debt is more than the total size of America’s $20 trillion economy and equivalent to the GDP of China, Japan and Germany combined.
Falling in the jurisdiction of the Inquiry Commission, headed by National Accountability Bureau (NAB) Deputy Chairman Hussain Asghar, will also be approximately $400 million loan that the Khyber Pakhtunkhwa government got from the Asian Development Bank (ADB), Agence Française de Développement and European Investment Bank to build the Peshawar metro (Bus Rapid Transit). The three metro systems built in Islamabad-Rawalpindi, Lahore and Multan do not come in the purview of the Commission as these were financed by the then Punjab government from its own resources.
The debt of PSEs has now climbed up to Rs2.1 trillion (5.5% of GDP) as against Rs1.360 trillion (3.5% of GDP) in September 2018.
More than $10b foreign debt has now been added, which has not risen to over $106b. This doesn’t include the IMF loan of $6b to be provided over a period of three years, and $2b to $3b Pakistan will get from the World Bank and ADB in the next three years. Besides, the unprecedented beating of rupee and appreciation of US dollar has soared the foreign debt.
Apart from Hussain Asghar, another NAB representative has been included in the Inquiry Commission besides one official each of the Inter-Services Intelligence, Military Intelligence, Intelligence Bureau, Federal Investigation Agency (FIA), Federal Board of Revenue, Security Exchange Commission of Pakistan, SBP, Auditor General of Pakistan and Accountant General, Pakistan Revenue (AGPR).
The SBP has the details of all the loans taken by the two previous government and their use and releases.
The commission, formed on June 22 and asked to finalise its report within six months, is mandated with fixing responsibility about any irregularity or illegality found during investigation and refer it to the relevant agency or department for prosecution. This means that the cases will be instituted with the NAB or FIA.
The scope of expansion of the forum was provided in the notification which said the commission is empowered to engage any person from the public or private sector, locally and abroad, as a member, consultant or advisor for assistance.
The forum is inquiring and investigating the award or implementation of any contract or agreement or project and whether any debt was taken for a particular project or undertaking and the allocated money was then spent and expended on it or not.
It is examining whether the terms and conditions of any public contract were tainted or benevolent or artificially inflated to facilitate any kickbacks? If so, in whose favour?
The commission is also looking into whether any holder of public office or their spouses, children and any persons connected to them expended any public funds so as to meet personal or private expenditures beyond what has been permitted under the law and rules.
Omar Hameed was designated as the member/secretary of the commission. He had worked as additional secretary and joint secretary of the Economic Affairs Division for over three years when the then finance minister Ishaq Dar had negotiated most of the foreign loans, now under scrutiny.