Dar concedes preponderance of external debt

ISLAMABAD: A day after presenting the budget for the fiscal year 2023-24, Finance Minister Ishaq Dar Saturday said the government would negotiate with bilateral countries for rescheduling of debt with the request to backload principal amount and payment of servicing.

Addressing a post-budget press conference along with the economic team, the finance minister said there is no issue as far as domestic debt is concerned but for external resources the country has to mobilise resources through remittance and exports and then adjust spending according to resources.

Dar added that: “You can always negotiate with bilateral countries not for the haircut or write-off but for long-term rescheduling of debt with the request to back load principal amount and payment of servicing. He said that this kind bilateral rescheduling of debt, the government would consider after the budget process is over”. He said that there is no plan for rescheduling of Paris Club and multilaterals debt and would make payment in time when it becomes due. Dar said that there is no need of rescheduling of domestic debt.

Post-budget press conference: Dar looks to pacify concerns

He added that Saudi Arabia and the UAE has given confirmation of $2 billion and $1 billion and the amount if did not come till June 30th, it would be realised in the next fiscal year, whereas, the IMF $4 billion was allocated for 9th and 10th review. He added that there is an alternate plan against fund $4 billion and explained that the government would have access to the facility of around $3.5 to $4 billion debt which was retired in the current fiscal year.

The minister said that there is no chance of the IMF’s 10th review now but $1.1 billion of 9th review might be materialised. He further stated that Plan-B is always available for self-reliance but it cannot be debated publically while reiterating that Pakistan would not default. About petroleum levy, he said that it would not be increased beyond Rs50 per liter and added budget was prepared at exchange rate of Rs290 per dollar.

About ad-hoc relief allowance for government employees, he said it is a standalone and would be adjusted when fiscal space would be available it would be merged. The finance minister said that the capacity payment is sovereign guarantee and it would be looked into prudently because IPPs lenders and financiers are abroad and all of their contracts are in dollar term payments. He said that the government cannot afford Rs1,000 billion subsidy every years for the power sector and regretted the highest non-recovery of some Discos. He said that every discos difference is being picked up in the budget.

About minimum wage, he said the civil society should also play its role with regard to enforcement of the minimum wage.

The finance minister said that Discos are being considered for privatisation besides outsourcing of airports, adding that there are companies from 12 countries wanted to participate in the bidding process and government intends to seek expression of interest (EOI) of one of the airports in July 2023.

About extension in GSP-Plus status, he said that efforts are being made and hopefully it would be extended. Dar said that population growth is alarming as well as unsustainable and would eat up the entire development if not addressed by remaining within the mean of religious boundaries. This agenda is pending for CCI meeting. He said that defense budget is Rs1,804 billion or 1.7 percent of the GDP and is realistic, keeping in view, the size of the GDP and the budget of a neighbouring country.

As far as Etisalat pending $800 million is concerned, he said legally Pakistan is on a very weak wicket because of contract it signed years ago. He said that Etisalat wanted to end the deal after realising that the bid was higher but Pakistan signed a new supplementary contract with it promising transfer of PTCL properties. However, as of now, 33 out of 3,000 properties could not be transferred and Etisalat got worked out their value at $776 million. Despite that, he said that Pakistan has kept Etisalat engaged to find a way out.

The finance minister said that 3.5 per cent GDP growth target is achievable and non-tax revenue would materialise because SBP profit combine with petroleum levy would be Rs2 trillion. He said that the government has allocated funds for election in budget for next fiscal year after consultation with the ECP and any statement with regard to delay in election by the allies was their own view point and there is nothing unconstitutional in this regard. However, he said that his party or prime minister have not made any such statement. He said that agriculture, SMEs, IT sector etc would be driver of growth and development in the country.

Copyright Business Recorder, 2023