Increasing public debt

The government has acquired short term foreign loans of $10.37 billion from friendly countries, banks and multilateral donor agencies. The loans that were obtained in the past one year carry high interest rate from 4 percent to 5.5 percent. The maturity period of loans secured from Chinese banks is two to three years and the ones released by commercial banks of Gulf countries and Europe is repayable after one year. Revenue Minister Hamad Azhar informed National Assembly that in the last fiscal year, Public debt has increased by Rs.9.3 trillion.
The short term loans always exacerbates the burden of debt servicing and Pakistan will have to pay $ 9 billion during the current fiscal year in the shape of principle amount and interest that is accrued on the foreign loans acquired by the previous government. A few days ago debt liability of $ 1 billion was paid despite the rollover commitments by lending countries. Rs.810 billion of government revenues were devoured by debt servicing in the last fiscal year. Mounting public debt in itself is not bad if it is spent on projects that enhance the productive capacity of the economy and boost economic growth. If it is spent on modernization and expansion of agriculture and industry then it gives spurt to economic growth. But if it is incurred on such non-essential grandiose schemes which do not contribute to GDP directly on sustained basis then it create debt trap.
The short term maturity loans acquired by the previous government have become headache for the PTI government because medium to long term loans that were in the pipeline have shrunk. The quantum of concessionary policy loans and project assistance has declined from the donor agencies including the World Bank and Asian Development Bank.
The loans obtained by the last PML-N government were mostly used for paying the swelling import bill. Debt servicing now accounts for 27 percent of the public expenditure. It takes heavy toll on development expenditure as the approved allocations under Public Sector Development programme are frequently slashed and squeezed. The axe then falls on social sector development. In view of the massive drain on the scarce revenues, government has decided to sell on market rate at Dubai Expo the unutilized precious government properties to generate resources for public welfare. Different ministries have identified 32 properties so far. The funds thus generated will be spent on building schools, colleges, universities and hospitals.
Apart from the unutilized immovable properties, high value government lands have been occupied by different Organizations for which even rent at nominal rates is not paid. Pak-Arab Refinery limited has been in possession of 44 acres of land Evacuee Property Trust Board for the past 23 years.
For the return of this land notices have issued to this company. Likewise, Pakistan Railway lands in different cities across the country have been occupied by influential people that need to be taken over from them for sale at market rate.

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