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ISLAMABAD: The government informed the National Assembly on Friday that it planned to clear off its debt liabilities by selling public sector enterprises (PSEs).
In an otherwise lacklustre session, a parliamentary secretary claimed that PML-N had received people’s mandate on its election manifesto that included privatisation of national entities.
Finance Minister Ishaq Dar said in a written answer to a question that the total domestic debt stood at Rs18,093 billion at the end of September and Rs1,304bn was spent on debt servicing during 2014-15.
Over $18bn foreign loans obtained by current govt, Dar informs National Assembly
He said the government wanted to enhance its debt repayment capacity through resource mobilisation, by increasing the tax-to-GDP ratio from 11 per cent to 13pc by 2017-18 and repaying expensive domestic debt with concessional external loans. He said the government was trying to boost economic activities, increase foreign exchange reserves, restore international investors’ confidence and achieve fiscal discipline.
“Furthermore, privatisation of various public sector enterprises is under process — 90pc receipts of privatisation will be used for debt retirement,” Mr Dar said.
He said the fiscal deficit was expected to drop to 4pc of Gross Domestic Product in 2016-17 from 5.37pc recorded in 2014-15.
The enhanced fiscal space will reduce the government’s borrowing and augment its repayment capacity.
In reply to another question, he said the government had received $18bn foreign loans by Sept 30. These included $3.5bn bonds and $4.77bn received from the International Monetary Fund. He said the budget estimates for repayments were prepared on the basis of the schedules agreed under the loan agreements.
The IMF loan is meant exclusively to build foreign exchange reserves and has not been used for budgetary support needs. The amount is shown as part of
the reserves (currently $19.92bn) with the State Bank being the custodian.
Replying to a supplementary question asked by the PPP’s Nafisa Shah, Parliamentary Secretary for Finance Rana Muhammad Afzal Khan said the government had decided in principle to privatise public sector entities — both running in profit and making losses.
“Privatisation was part of our election campaign and people have voted us into power. Hence questioning the government over its privatisation policy doesn’t make sense.” Rana Afzal said the Pakistan Steel Mills had been a profitable concern but today everyone is aware of its state of affairs. Other PSEs would also be sold, he added.
Published in Dawn, November 28th, 2015
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Comments (47) Closed
Nov 28, 2015 08:13am
Simply brilliant, in the next few years, we will be a super developed nation. Watchout india, the rise has begun.
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Nov 28, 2015 08:33am
I thought Nawaz Sharif and his pals promised not to take any debt? Was that a lie?
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Nov 28, 2015 08:49am
How, I mean how will you retire the debt when you go on to borrow 500 billions more a month from the domestic banks and about 600 million USD in foreign loans every month. Soon 100% of our budget will go on debt servicing, no defense, no development and no raise in salaries. Every government only thinks of making things possible for only their own tenure without thinking what the end result will be. Cut government costs, stop corruption and punish the economic criminals, that's what you need to do sir.
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Nov 28, 2015 08:50am
Plz don't touch the people's assets.Recover corruption money from all those who ran away,during your tenure,and pay all the debts of Pakistan Mr Dar.
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Nov 28, 2015 08:50am
3rd class policied of a 3rd class finance minister of a 3rd class government.
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Nov 28, 2015 08:51am
Mr. Dar should receive an ward for telling the truth, which he seldom does. Leave some asset for the next regime to sell & pay the debt.
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Nov 28, 2015 08:54am
Who has given Dar a right to sell the national asset, such as PIA. These morans are not thinking os wars. Who will transport the troops and war materials.
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Nov 28, 2015 08:59am
The nation should not allow the national assets to be sold off under the pretext of paying off debt.
Their personal businesses are flourishing and the nation is being burdened with debt.
Stop them !
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Nov 28, 2015 09:01am
Not even half of term completed yet and over $18bn foreign loans obtained by current govt, and country is worst condition ever !
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Nov 28, 2015 09:06am
@ben
keep dreaming
btw why would pak progress affect india ?
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Nov 28, 2015 09:17am
Such a brilliant finance minister we have, the nation does not have to worry for any thing. For God sake please stop this catastrophe of debt.
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Nov 28, 2015 09:21am
Pakistan is the country where everybody wants to blame everything on everything but not a single person in the power succeeded to deliver. Let this government finish the tenure and then we shall judge the performance based on what they delivered. Pakistan's financial situation is really bad. If they think that they can take us out, let them do an experiment, if failed vote for PTI.
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Nov 28, 2015 09:22am
In the last ten years alone the Pakistani rupee has plunged from Rs60 to the dollar to Rs105 today.
If debt is taken in foreign currency the rate may appear low, but the odds are it will be costly to pay back.
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Nov 28, 2015 09:33am
@ben ha ha still u r in dreams ah...!! woke up soon...!!!
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Nov 28, 2015 09:37am
"Over $18bn foreign loans obtained by current govt, Dar informs National Assembly." The question is where did this $18 Billion go!
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Nov 28, 2015 09:40am
@Fazal safi Please state things bluntly. People here do not understand sarcasm.
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Nov 28, 2015 09:41am
What will be the course of action to clear debts after nothing is left to privatize? Just think over it because that time has to come sooner or later.
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Nov 28, 2015 09:44am
@Dr. Abdul Rahman @ the rate that this administration is borrowing and looting the treasury, there will be nothing left of the country by 2018. We will be forced to surrender our nukes just to survive. USSR collapsed and became Russia in spite of all its nukes because it's economy had collapsed; not because there forces retreated across the Amu Darya.
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Nov 28, 2015 09:45am
@Woz ahmed It will be very difficult to pay back especially because the money being borrowed is being looted and siphoned off. What is there to show for the $18 Billion?
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Nov 28, 2015 09:52am
Unfortunately most people don't see past the fact that privitization means that the wealthy politicians and their friends will have control over state-level machinery. It is a disaster in the short run, and even in the long run if these institutions are sold to a majority holding of a few rich in a small knit community.
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Nov 28, 2015 09:59am
@ben LOL.
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Nov 28, 2015 10:00am
Every where first loss making entities are sold while profit making entities are kept as long as they are paying taxes and not asking for subsidies. Govt had planned to sell profit making entity like OGDCL rather than focusing on PIA and pak railways. If they just employ emirates case on PIA, they can make is successful. Pak Railways and Steels should be sold but govt should keep PIA and bring down workforce from 400 employees per plane to 100(international standard) per plane.
This govt lacks good governance and are much more worse than PPP for sure.
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Nov 28, 2015 10:00am
@rehan Ben meant sarcastically bro.
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Nov 28, 2015 10:01am
@syed good question...!!!
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Nov 28, 2015 10:08am
Please, Please, Please Finance minister do not talk about finance, finance does not mean only pumping IMF/world Bank loan in State Bank and then clapping for large foreign reserve in S Bank. Pak Rs is 106 against US $. Chines $ pumping for Gawader project or corridor project, or aid does not show Pakistan economy. Please try to understand, economy based on your basic production or your own source of income.
You could not privatize PIA, Steel Mill, Wapda, Railway in 2.5 years. Your minister for privatization is busy some PML-N political debate on TV all the time. You are paying Billion Rupee in salary to these worker for 7% Steel Mill production.
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Nov 28, 2015 10:20am
@naji chinese not giving aid for gwadar project....!!! its 75% loan nd 25% aid....!!! and also its going profit for chinese because they are not going to pay any duty taxes for using road or railways...!!
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Nov 28, 2015 10:32am
Clapping for those who still think pml(n) is taking Pakistan to progres by taking billions in loans
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Nov 28, 2015 10:44am
It's just half of their tenure passed and already $18 billion loan taken? At this rate by the time they'll finish their tenure, they would have taken $40 billion and who would pay that back? Is this the kind of experience PML-N was talking about before elections? And Dar is admitting foreign reserves are made up of loans from IMF so all that talk of achieving economic stability is a lie? You don't stabilize yourself by taking more loans that too on high interest rate. Bad economic policies of corrupt and failed government.
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Nov 28, 2015 10:47am
Instead of mishandling public property PML-N government and PPP should return to the nation all their illegally acquired wealth. People of Pakistan must act or else get ready to live a life worse than poorest of African people.
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Nov 28, 2015 11:24am
Those debts, which is created by you and previous government so sell all government properties, assets and no one will ask you.
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Nov 28, 2015 11:25am
With a domestic debt of $175B, and an external debt of over $75B, Pakistan's national assets can't pay for a small fraction of this debt, as these aren't worth much. Any serious government should tell Pakistanis what these assets are costing the taxpayers and are a huge burden on the economy. So their divestiture is more to save the country from sinking deeper into debt - Steel Mills and PIA to name two. Pakistan needs massive foreign investment to turn the economy around into an exports and services based economy. However so far the two political governments have shown no capability to attract these investors!
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Nov 28, 2015 11:41am
Pakistanis learn from the Indian mistakes politicians first ensure select sectors go sick so as to have the pretext for privatization. Then the same ministers under various holding companies front the new private entities.
What your government needs to focus on is to limit unions and increase efficiencies of the human resources in public sector companies. As they say you can't live to commit all your mistakes learn from those committed by others
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Nov 28, 2015 12:14pm
The proceeds of privatisation are actually going to go in the pockets of our corrupt politicians. History is the witness!!
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Nov 28, 2015 12:16pm
The real dynamics of domestic debt is as follows (Please publish): Effective rate of domestic debt is much low than people imagine. Government borrows from banks and then invests further liquidity by banks discounting those bonds from State bank (Its a complicit arrangement)- Then the interests the banks earns from those bonds reflect in banks income statement is charges tax of 33% therefore the effective rate of these bonds is actually on;y 66% of the quoted rate- additionally the arbitrage income from discounting that state banks earns amounts to tens of billions rupees is also repatriated by government every year. Effective rate of these bonds is around 4.5% and there is no way Pakistan can get foreign debt this cheap- Besides in a foreign exchange strapped country like Pakistan, this doesn't make any sense.
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Nov 28, 2015 12:27pm
They basically speculated on only one factor: The growth trajectory of home remittances to out pace the debt retirement schedule-They are betting their bottom dollar on that and nothing else!
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Nov 28, 2015 12:39pm
lies and lies all the same in your last govt same person has promised a lot of things even has taken our dollars from dollars account.
after completely ruining the country making it defaulter they ran away with the help of cnc.again the team of foundry is back with the same agenda. they becoming richer and Pakistan becoming poorer.
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Nov 28, 2015 01:36pm
How many of you here questioning the debt actually pay taxes? The tax GDP ratio of 11 percent is simply pathetic. If everyone paid their fair share of taxes, we wouldn't have to borrow this much. Also, why should government control assets In a capitalistic economy? Lastly, about the comment about pia and times of war! Having pia under ministry of defense is ludicrous in itself. Stop thinking and talking about war and focus on developing our beloved country. Long live Pakistan. Ameen
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Nov 28, 2015 01:49pm
It is a good step by the PML-N Government to pay off debt by money raised through privatization. He did not share any strategy or plan to eliminate further borrowing. The Finance Minister also did not share any plan to drastically reduce government expenditure; both key factors in regaining our national economic health. The government and the parliament need to shut down scores of unnecessary departments and ministries as well as eliminate the regimen of providing luxurious perks (government paid housing, cars and servants etc.) to the civilian and military bureaucrats in order to bring the spending under control.
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Nov 28, 2015 01:54pm
Who will buy them on cheap rates? Dar Saab please stop your crazy taxation frenzy, give us jobs.
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Nov 29, 2015 12:10am
we saw that privatization to pay debts etc has been never fruitful. The govt possessed riches go out reduce its writ as bankrupt and next brings in more debts what for payment govt has nothing to offer to sale. This is a cruel way of living as a pauper imaginary person called pakistan in the comity of nations.Benazir Bhutto 1st govt brought this formula and the next time when she came to power she de regularized and denationalised every thing in a scientific way so state would be having no concerns with progress and development saying Parliament with politicians will only be make laws and other things done at the grassroots will be the concerns of people who are sovereign now. And thus this sovereignty of gangs of illiterate gave us terrorism. For God sake somebody stand up and support and direct the govt to follow the Ayub Khan way of industrialization...building industries and selling out to worth capitalists via industrial bank. death to molvies, jumatias Taliban and Iran wallas
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Nov 29, 2015 01:56am
Mr. Dar's math does not add up. He indicates that his government has only taken 18 billion dollars of loans. What happened to the 46 Billion dollar loans from China to build infrastructure under the Economic Corridor. I am sure its not free money. If we keep borrowing at the same rate when only half of the Govt's term is complete, by end of their full term country will be under 36 Billion dollar additional loans. The country will be unable to pay the interest on the loans and most certainly default. That will be disastrous for the country and this time bomb has already started ticking.
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Nov 29, 2015 03:16am
not getting the logic. He is borrowing more and more and then doing priviatisation to clear off debts.
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Nov 29, 2015 06:29am
Actually the PML N key personalities want to buy profitable institutions by keeping themselves behind the scene
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Nov 29, 2015 06:32am
Its mean Dar want to sale profitable institution to make some key personalities more wealthy
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Nov 29, 2015 07:29am
@ben - with super developed nation status. Pakistan should work on immigration policies. People from western countries will try their best to move to Pakistan in millions!
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Nov 29, 2015 07:57am
@Mohammad Fida. It appears you are not knowledgeable about the free economy and economic development of the country. First of all government is neither capable nor properly equipped to run enterprises.In the most advanced countries of the world , all the businesses are owned by private companies including airlines, railways, power generation, banks, insurance companies and utilities. Russia, China and other communist countries have learned the hard way that Communism (economic system where means of production are owned and managed by the govt.) does not work and have abandoned it. Do you think China under communist system could emerge as the second largest economy of the world? of course not. All the communist countries have sold their holdings to private companies and now these companies are prospering, hiring more employees and paying taxes rather than accruing losses. In 1981 the British Airways was privatized and it became one of the most profitable airline of the world.
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Nov 29, 2015 08:16am
@Mohammad Fida . BB's father Z A Bhutto was the one who nationalized all the private enterprises and put the economy hundred years back and the effects of which are still lingering. Bilawal grand son of Bhutto still talks about nationalization in this day and age. Some time education does not help when you don't have an open mind and you are stuck in the old world grand father thinking.
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