$7bn Chinese, Saudi deposits: Rs402bn paid as cost of rollovers

ISLAMABAD: The federal government is said to have paid over Rs 402 billion (approximately $1.7 billion @ Rs 235/USD) cost of rollovers of $7 billion Chinese and Saudi deposits, well informed sources in Finance Division told Business Recorder.

As per Rules of Business, 1973, the Ministry of Economic Affairs is responsible for, amongst other, external debt management, including authorization of remittances for all external debt servicing, compilation of data, accounting and analysis of economic assistance from foreign governments and organisations.

Furthermore, the Ministry of Economic Affairs is also responsible for making repayments of foreign loans and credits contracted by Federal Government for projects and other borrowings arranged by the Finance Division including short-term borrowings, Euro bonds, Sukuk bonds, etc.

For this purpose, the Economic Affairs Division, for budgeting purposes, is required to prepare budget estimates for debt servicing of foreign loans and credits obligated upon Federal Government budget.

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Accordingly, for financial year 2022-23, estimated budgetary allocations were Rs 4,446 billion for servicing of foreign loans and credits.

However, revised estimates have been prepared amounting to Rs 4,044 billion for the current financial year against the following demands: (i) Foreign Loan Repayments (FLR)- budget estimates, Rs3,792,400,505,000- revised budget, Rs 2,988,300,528,108, i.e. saving of Rs 804,099,976,892; (ii) repayment of Short-Term Foreign Loan Credits (RSTFC)- Rs 142,771,740,000, revised budget estimates Rs 330.625,097,613, i.e., excess Rs 187,853,357,613; and (iii) Serving of Foreign Debts (SFD) budget estimates for 2022-23, Rs 510,971,762,000- revised estimates Rs 725,369,850,033, i.e., Rs 214,398,088,033.

Sharing the details, sources said, on June 5, 2023, Ministry of Economic Affairs, sought permission of Finance Minister Senator Ishaq Dar as Chairman Economic Coordination Committee (ECC) of the Cabinet to table the summary titled “provision of Technical Supplementary Grant of Rs 402.252 billion on account of revised budget estimates for FY 2022-23” under demands related to debt servicing for foreign loans and credits as an additional item in view of the exigency in the matter which he granted.

According to sources, the Economic Affairs Division briefed the forum about the case as stated in the summary, saying that the revised estimates for the financial year 2022-23 indicate saving of Rs 804.09 billion in demand, whereas excess expenditure of Rs 402.25 billion (Rs187.853 billion + Rs 214.39billion) Technical Supplementary Grant (TSG) of Rs.402.251 billion was required. Of this, the amount of RSTFC was Rs 187,853,357,613 and SFD amount of Rs 214,398,088,033.

Ministry of Economic Affairs further explained that the reasons of excess/ savings in demands were given as follows: (a) USD 7,000 million of China SAFE Deposit and Saudi Time Deposit were rolled over; and (ii) budget estimates for the FY 2022-23 were prepared on the basis of parity exchange rate of PKR 186/- per USD, whereas actual payments have been made at average exchange rate of Rs. 235 per USD.

The Economic Affairs Division, sources said, requested the ECC to accord approval for provision of Technical Supplementary Grant amounting to Rs 402,251,445,646 against the savings amount of the summary.

The Chairman, ECC invited comments/ views of Secretary, Finance Division during the meeting, who supported proposed TSG.

After brief discussion, the ECC granted approval of Economic Affairs Division’s proposal titled “provision of Technical Supplementary Grant of Rs 402.252 billion on account of revised budget estimates for FY 2022-23” under demands related to debt servicing for foreign loans and credits. The ECC has approved Rs 5.252 billion Technical Supplementary Grant for Ministry of Defence and its Executive Departments during CFY 2022-23.

The Defence Division briefed that owing to financial constraints of Government of Pakistan, cushion of an amount of Rs 5.252 billion had been created in defence budget to manage critical ’shortfall of civil demands through Technical Supplementary Grant during CFY 2022-23. Finance Division had agreed to the proposed TSG.

Copyright Business Recorder, 2023