Government obtained $14 billion in foreign loans, grants till last year: report

The incumbent government obtained foreign loans and grants amounting to $14.005 billion till June 30 last year, according to a report presented in the National Assembly on Wednesday. The report on foreign and domestic loans obtained by the country since 1985 was presented by the Chairperson of the Special Committees on Foreign and Domestic Loans, Shahnaz Wazir Ali.
According to the report, total loans and grants worth $6.379 billion were obtained during 1985-1988 in the Zia regime. The amount of loans and grants reduced to $5.19 billion in the first regime of PPP ie decrease by $1.2 billion or 19 percent. The report stated that in the first government of PML-N, an increase in loans and grants was recorded which surged to $7.574 billion. The amount of loans and grants obtained during the second governments of PPP and PML-N was $8.147 billion and $7.95 billion, respectively. The highest amount of the loans and grants were obtained during the Musharraf regime, recorded at $23.013 billion between 1999 and 2008.
The report maintained that major donors of grants were the US, UK, Japan, UNHCR and Saudi Arabia. Apart from this, loans were obtained from ADB, IDA, IBRD and Japan. Recently, China became the top bilateral donor. Foreign grants and loans were mainly obtained for budgetary /balance of payments support; project financing; short-term credit; earthquake relief and rehabilitation; flood relief and rehabilitation; commodity import; temporarily dislocated persons and Afghan refugee relief and rehabilitation.
The report said that the Committee found no material inconsistencies. However, project monitoring and evaluation remained weak and accrued benefits of these expenditures were not captured thoroughly. There seems to be limited planning on post completion maintenance and effective administration of the project. Recommendations: The report recommended that a Special Committee may be formed to evaluate Project Loans and to examine and scrutinise necessity and utilisation of loans for the amount equal or exceeding US $100 million. It further recommended that the limit of 2 percent of GDP on issuance/rollover of Government guarantees seems high keeping in view increasing size of nominal GDP and needs to be revisited. Moreover, limit on the outstanding stock of contingent liabilities needs to be defined in FRDL Act, 2005.
The Government was never able to achieve a revenue surplus. There is a need to revisit this clause of FRDL Act 2005 by setting specific targets to achieve revenue surplus with in stipulated time period. Given the strong rigidities associated with current expenditures, government needs to shore up its revenue mobilisation efforts to achieve the revenue surplus. The Committee will put up all its recommendations before Economic Co-ordination Committee (ECC). Meanwhile, the chairperson of the standing Committee on public Accounts (PAC), Nadeem Afzal Gondal presented a report on the review of implementation status of PAC directives on Audit Reports for 1996-97, 1999-2000,2000-01,2005-06 and 2008-09.