ISLAMABAD: The Imran Khan government has added $23 billion (Rs3640 billion) in the public debt on account of devaluation and increase in discount rate just to ensure IMF loan of just $6 billion, says Dr Ashfaque Hasan Khan, Pakistan’s eminent economist and Principal and Dean of School of Social Sciences & Humanities at NUST.
Extremely worried on massive devaluation of Pak rupee in one day by Rs5.18 against US dollar, Dr Khan said that because of appreciation of US dollar by Rs5.15 on Wednesday, Pakistan piles up more loan of over Rs500 billion.
However, in the open market the value of US dollar surged to Rs162.50 multiplying economic miseries of 200 million countrymen. More importantly price of gold has increased up to Rs81000 per Tola.
However, mentioning about the inter-bank rate of US dollar at Rs160.15 on Wednesday, Dr Khan said, since the PTI government came to power, it has added Rs2500 billion in the public debt on account of devaluation of Pak currency owing to which the debt servicing has increased by Rs75 billion.
He didn’t stop here rather continued, saying that in the wake of increase in discount rate up to 12.25 percent, the incumbent government has also added Rs1117 billion in the public debt. So the debt accumulated, both in the wake of devaluation of Pak currency and raise in discount rate, stands at Rs3640 billion which is equal to $23 billion. ‘It is simply unbelievable,’ Dr Khan said.
He said that ensuring the ‘Market Based’ exchange rate is one of the prior actions to qualify for the IMF loan programme and added arguing that only IMF and Pakistan economic team know exactly where the exchange rate will settle.
The sources in the Finance Ministry on the condition of anonymity confided to The News the US dollar will hike up to Rs200 billion by end of next fiscal June 30, 2019. So far, the incumbent government has acquired $9.5 billion loan from international creditors in 11 months. Out of the $9.5 billion, China gave $6.7 billion in loans from July through May of the current fiscal year, which is equal to 70% of total disbursements. The Chinese loans include $2 billion of SAFE deposits, which Islamabad received in July 2018, but were shown on the books of the federal government for the first time in April.
Out of the $6.7 billion, China gave $2 billion in SAFE deposits and $2.53 billion in foreign commercial loans, also for cushioning the declining foreign exchange reserves. It also gave $628.4 million for the construction of two ongoing nuclear power plants. China gave $1.5 billion in project financing in the past 11 months, mainly for CPEC projects. In May alone, it disbursed $129 million for project financing.
On the back of Chinese loans and fresh borrowing from three banks last month, commercial financing surged to $3.8 billion as of the end of May. Foreign commercial loans exceeded the annual estimate of $2 billion by 86%, said the Finance Ministry sources. Ajman Bank PJSC disbursed another tranche of $121.5 million in May, taking its total loans to $271.5 million.
A consortium of Credit Suisse AG, UBL and ABL gave an additional $200 million last month, taking its total loans in the past 11 months to $495 million. Noor Bank released $222.5 million, taking its total disbursements to $242.5 million in 11 months. The lending by multilateral agencies amounted to $1.5 billion or 45% of the annual projected receipts from these multilateral agencies.
The country received $426 million from the ADB till the end of May, which was equal to only 30.4% of the annual estimate. The World Bank disbursed only $332.2 million, which was equal to 39% of the annual estimate.
The Islamic Development Bank (IDB) disbursed an additional $75.7 million last month, which took its total loans for Pakistan to $654 million in 11 months. The IDB disbursed nearly two-thirds of the annual estimate.
