Had it been crooks running the show it would have ended up somewhere in Swiss accounts.
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Pakistan returns $ 1.1 b ADB expensive debt :k:
Sharafat Kazmi
Islamabad—First time in the history of Pakistan, the government has paid US $ 1.1 billion (Rs. 62.92 billion) most expensive debt to Asian Development Bank (ADB) ahead of scheduled thanks to robust economic reforms of the last four years.
Addressing a press conference here Thursday Finance Minister Shaukat Aziz said that the government would make prepayment of expensive debt of one billion US dollar by the end of this calendar year.
“The country’s total foreign debt and foreign exchange liabilities will be brought down to US $ 33.5 billion by the end of current fiscal year (June, 30)”, Aziz said. Five years ago the total amount of foreign debts and foreign exchange liabilities were US $ 38 billion, he added.
Aziz said the loans taken in the past from ADB were relatively expensive with interest rate ranging from 8 to 11 per cent. The government decided to pre-pay of fourteen most expensive debts to ADB, which would be repaid to Bank from 2009 to 2019, the minister explained.
“It is estimated that nearly US $300 million have been saved by the country for re-payment of these loans over their maturity period”, Aziz said. “This will allow us a fiscal space for development, more investment in health, education and development programmes, improving debt service capability and debt service record “.
To a question, Aziz said that the payment was arranged through the privatisation of government entities according to the policy that 90 per cent would be for debt repayment and 10 per cent for poverty reduction.
To another question, Shaukat Aziz said the projects, which were started by the ADB’s fund, would be arranged through the banking system loan, especially WAPDA’s projects.
The Finance Minister said, Pakistan is now on path of growth and recovery.
He said that in a simple ceremony the President and Prime Minister witnessed giving of cheque worth US $ 1.1 billion to ADB’s representative and money being remitted.
“It (pre-payment) is a great achievement and will have a snowball effect on the economy by improving our balance of payments, drawing more investors and making additional funds available for the development projects,” the President said on the occasion.
He said, the repayment reflected the country’s resolve to reduce its debt burden, which for a long time had stifled the growth potential of the economy.
Tracing its effect on the availability of the additional funds, the President said when his government took over in 1999, the debt- servicing liability was over 64 % of the total budget which meant only 36% left for the development funds. “The debt liabilities have gone down to around 30% leaving 70% of the budget for development,” he added.
The President said that the repayment of debt has also improved the country’s balance of payment position.
“When we took over the balance of payment was in deficit of 4 to 5 billion dollars. We now have converted it into a surplus and with today’s payment it will further improve,” he said, and added that the reduction of country’s debt servicing liabilities was the main factor in converting balance of payment from deficit to surplus.
The President said as a result of its overall impact on the economy, the country would be able to draw more foreign investment.
Referring to the four years of robust reforms, the government had undertaken to free the trapped economy, he said the country’s economic sovereignty had been restored and was no more dependent on foreign assistance.
“The macro-economic stability has been achieved and growth potential of the economy is being unleashed,” he added.
Prime Minister Mir Zafarullah Khan Jamali, expressing his thoughts, said that his government fully supported continuity and consistency of policies and continuation of structural reforms in every area.
He reiterated commitment of his government to increase economic growth and transferring its benefits to the people.
“Economic growth this year should be higher than the target of 5.3% which will augur well for the people of Pakistan,” he added.
Both the President and the Prime Minister congratulated the Finance Minister and the economic team for the improvement in the balance of payments and overall economic improvement.
He said during the road show, the teams will meet potential investors, and hold individuals and group meetings with the investors.
They said their efforts have restored Pakistan’s economic sovereignty.
Shaukat Aziz said that transaction of Eurobond is going to be floated next week, marking Pakistan’s return to the international capital market.
He said, that it is being done in the backdrop of improved credit rating, improved macro economic situation, improved foreign exchange and current account and balance of payment situation and overall improvements in Pakistan’s economic performance.
Aziz said, the Economic Co-operation Organisation (ECO)’s finance ministers meeting would be held tomorrow and during the meeting subjects of mutual co-operation in tax collection, banking system, audit system and all other economic matters will be discussed.
