Loan for the sake of repayment of loans has emerged as Pakistan’s number one priority during the last decade as the country repaid $ 11.2 billion out of the total procured loans of $ 30.7 billion during the period.
A report prepared by the Economic Affairs Division (EAD) for the Senate Finance Committee reveals that the successive governments during the last 10 financial years of 2005-06 to 2014-15 (Gen Musharraf, PPP and PML-N) obtained loans of $ 22.7 from the multilateral institutions. The World Bank and Asian Development Bank were the main donors with assistance of over $ 8.3 billion each.
In case of bilateral donors loans of $ 7.9 billion were obtained. China emerges as the major bilateral lender which advanced $ 5.3 billion, followed by Japan with $ 1.1 billion and Saudi Arabia $ 979 million. The figures reveal that China has emerged as a major lender to Pakistan during the last decade. Experts believe that during the next decade China would emerge as the biggest lender to Pakistan due to the under-implementation China Pakistan Economic Corridor.
The report does not include the loan obtained from the International Monetary Fund (IMF) during the last decade. The EAD had no role in obtaining these loans as these were negotiated by the government and deposited directly in the central bank. If IMF loans are included then the figure crosses $ 45 billion mark.
The balance of payment support emerges as the number one priority for the government. Nearly 36 percent of the loan portfolio procured during the last decade was utilized for repaying foreign debt. Pakistan on the average repays $ 2.4 billion in foreign debt every year.
Energy and power sector emerge as the second most priority with loans of $ 5.2 billion. Considering the severity of energy crisis that is impacting two percent on GDP every passing year, it should have been the number one priority. The slow pace of energy sector reforms and continuation of circular debt cause troubles for procuring loans from the international financial institution.
Infrastructure development has remained a main priority for the successive governments and loans worth $ 2.9 billion were obtained for the transport and communications sector.
The report mentions that the government obtained loans worth $ 2 billion for governance, research and statistics. According to experts such kind of loans are also taken for the budgetary support as they are easy to obtain and lenders are willing to give to achieve their annual loan target.
The government obtained $ 1.7 billion in loans for the earthquake recovery and rehabilitation of the devastating calamity of October 2005. The loans obtained for education sector amounted to $ 1.5 billion, agriculture $ 1.2 billion, rural development and poverty reduction $ 1.2 billion and for floods $ 1.1 billion.
Repayment of Debt Remains Pakistan’s Top Priority