Pakistan owes Rs71.2tr to creditors, NA told

ISLAMABAD: Federal Minister for Finance and Revenue Muhammad Aurangzeb Friday told the National Assembly that as of end June 2024, the total debt of the country was Rs71.2 trillion of which Rs47.3 trillion (66 percent) was domestic debt and Rs24.1 trillion (34 percent) was foreign debt.

In a written reply to a question of Dr Nafisa Shah, who asked for details of domestic debt undertaken by the government, the finance minister said domestic borrowing is carried out through issuance of government securities (T-Bills, Pakistan Investment Bonds, Sukuk, etc) and National Saving Schemes. He further said that external borrowing was mainly obtained from multilateral and bilateral development partners and commercial sources, which include bank loans and Eurobonds.

He said over the medium-term, the strategy is to reduce the burden to a sustainable level by taking fiscal consolidation measures, including revenue mobilisation and expenditure rationalisation. “These measures are expected to generate primary surpluses that will reduce the need for borrowing as public debt is mainly obtained of the fiscal deficit.”

In addition, the government aims to promote measures that support higher long-term economic growth and efficient/ productive utilisation of debt.

Separately, in a written reply to the question of Shezra Mansab Ali Khan Kharal, Minister for Economic Affairs Ahad Khan Cheema told the National Assembly the international donors pledged a total of $10.987 billion in the international conference on Climate Resilient Pakistan held in Geneva last year on January 9, 2023. The written reply stated that out of total pledges, $10.44 billion was loan and $546.49 million was grant.

The donors were Australia, France, the European Union, South Korea, the USA, United Kingdom, Denmark, Italy, Germany, Japan, Norway, Canada, China, Kingdom of Saudi Arabia, Vietnam, Azerbaijan, Qatar, and international financial institutions such as ADB, AIIB, ISDB and WB. He said the Ministry of Economic Affairs is mandated for assessment of requirements, programming and negotiations for economic assistance from foreign governments and organisations. “Utilisation and execution of projects is beyond the mandate of the Ministry of Economic Affairs,” he added.

Meanwhile, Minister for Planning and Development Ahsan Iqbal told the National Assembly that over the past 10 years, the CPEC achieved numerous milestones with completion of 37 projects of over $25 billion.

In a written reply to a question of Dr Nafisa Shah, who sought the detail of the present status of China Pakistan Economic Corridor (CPEC) in Pakistan, the minister stated that the completed projects included 16 projects in energy sector worth around $16 billion, seven projects in infrastructure sector whereas other completed projects are related to Gwadar Port and socio-economic development.

The planning and development minister further stated that currently, 21 projects are under development in various sectors across the country while a number of the projects fall under the category of pipeline projects which are at various stages of negotiation with Chinese side and are expected to be developed under the framework of CPEC.

Meanwhile, the National Assembly was informed that an initiative has been taken to uplift 20 poorest districts of the country. Ahsan Iqbal said the initiative would be completed with the cooperation of the provincial governments. He said a package for the urban areas of Sindh has also been included in the PSDP which will be finalised with consultations of the elected representatives from the province. He said an alternative motorway between Karachi and Hyderabad would also be constructed. The minister said the government is giving priority to the development of Balochistan province. In response to Agha Rafiullah’s question, Ahsan Iqbal said that 100 percent of the federal revenue goes to pay off debts. After the 18th Amendment, regional development is the responsibility of the provinces, but despite this the Centre had initiated development programmes in various districts along with the provinces. Discussions are ongoing with China regarding the Hyderabad Motorway project, and this project will be completed as soon as possible. He said the size of PSDP has shrunk from Rs1,400 billion to Rs1,100 billion, and it’s possible that it would further decrease because 100 percent of the federal revenues goes in payment of debt.

The federal minister said that the process of structural reforms under the chairmanship of Prime Minister Shehbaz Sharif was going on and after the 18th Amendment, our development needs have changed.

In another written reply to a question, the planning and development minister said at present 11 CPEC projects worth around Rs276 billion are under construction which are being funded, or partially funded through the PSDP, including seven in Balochistan. Additionally, nine projects with cost of $2.4 billion are under construction through various mode of financing (Chinese grant, FDI, PPP, ADP IPP, etc).