Power crisis resolution can spur economic growth, National Assembly body told

The Finance Ministry on Tuesday admitted that the country was losing 2 percent of its GDP to the prevailing electricity crisis, resulting in a loss of Rs 52 billion in revenues and affecting 400,000 jobs. A senior official of the Finance Ministry informed the National Assembly''s Standing Committee on Finance that if the power crisis were resolved, GDP would increase by 2 percent, mobilise a revenue of Rs 52 billion, besides creating 400,000 jobs.
Principal Economic Adviser to the Ministry of Finance said that the impact of power crisis on the national economy was huge in terms of industrial productivity, loss to revenue and employment generation. The committee suggested that the Public Sector Development Programme (PSDP) funds should be diverted to the power sector to resolve the problem and its greater impact on the economy. However, Finance Ministry officials said that PSDP funds were also being utilised for power-related projects.
Additional Secretary, External Finance, Rizwan Bashir said that the government could not afford providing unlimited funds to the power sector because of fiscal constraints and their greater impact on the fiscal deficit. The fiscal deficit would be uncontrollable if such an approach was adopted, was the reply of the Additional Secretary to a question for providing funds to the power sector.
The Finance Ministry informed the committee that the value of rupee against the dollar decreased 42 percent over the past four years with an 11 percent dip in 2008, followed by 16 percent in the subsequent year and 4.7 percent in 2010, 0.58 percent in 2011 and 9.1 percent in 2012. The Ministry also informed the committee that overseas Pakistanis remitted around $47 billion over the past four years.
To a question about reason behind recent depreciation of rupee against dollar, he said that the economic team felt that latest increase in value of dollar was speculative. Briefing the committee about International Monetary Fund (IMF) loans, he said that Pakistan had so far received financing of SDR 9.69138 billion ($13.09 billion) from IMF for budgetary and balance of payments support since its inception and signed Stand-by Arrangements (SBA) with IMF for SDR 5.169 billion ($7.6 billion) in November, 2008. The amount was subsequently enhanced to SDR 7.236 ($11.327 billion). The IMF disbursed $7.878 billion which includes $0.452 billion under the Emergency Natural Disaster Assistance (ENDA) framework. The above amount was disbursed during November 2008-September 2010 with first instalment of SDR2.067 billion or $3.050 billion in November 26, 2008. And the last instalment of SDR0.297 billion or $0.452 billion on September 17, 2010 and the remaining were not disbursed because of the country''s failure to fulfil the agreed criteria.
The meeting was informed that during 2011-12, the repayment of foreign currency loans amounting to $3.6 billion (Principal $2.7 billion and interest $0.9 billion) was made. This includes payment of $1.319 billion (Principal $1.155 billion and interest $0.164 billion) to IMF. Finance Ministry also stated that during the current financial year, debt servicing of $6.20 billion (Principal $5.30 billion and interest $0.90 billion) is obligated to be paid.
This includes an amount of $2.92 billion (Principal $2.81 billion and interest $0.11 billion) to the IMF. As on 30-11-2012, an amount of $1.20 billion (including $0.06 billion interest) stands repaid to IMF, while the remaining amount of $1.67 billion (including $0.05 billion interest) will be paid by the end of June, 2013. Necessary budget provisions are available to make the above payments to the IMF.