ISLAMABAD: Most of the budget figures for the current fiscal year 2022-23, including GDP growth rate, debt-to-GDP ratio and the budget deficit would fluctuate massively on account of unabated depreciation of the local currency against the dollar followed by heavy rains and floods which devastated all sectors including agriculture and infrastructure across the county.
This was stated by senior officials of the Ministry of Economic Affair while briefing the National Assembly Standing Committee who also revealed that fearing poor response, the Finance Ministry, the State Bank of Pakistan (SBP), and the Economic Affairs Division have recommended Prime Minister Shehbaz Sharif for not going for moratorium and rescheduling of loans options as the country is already availing this facility to meet Covid-19 challenges.
Further, due to lowering of ratings by different rating agencies due to political and economic instability, the market is not ready to respond positively. Rather, the government needs to focus on multilateral and bilateral sources for more inflows, the official added.
The committee on Economic Affairs Division met with Mian Najee Ud Din Awaisi was informed that due to the massive depreciation of the local currency, debt-to-GDP ratio which is currently 71 percent would reach 75 percent. Further, the budget deficit would widen while due to floods and rains GDP growth rate would reduce.
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However, work on these figures would begin by mid-October and all these figures would be consolidated by December. The official said that with the current rate of depreciation nothing can be projected but there is a need to deal with the matters on a day-to-day basis. He further said that in such circumstances the government would be required to further increase its revenue. Replying to a question, Federal Minister for Economic Affairs Ayaz Sadiq said that $370 million has been diverted from different development projects to the BISP for flood-related assistance, of which, Rs30 billion has already been disbursed.
He further said that the United Nations Development Program (UNDP), the Asian Development Bank (ADB), and the World Bank (WB) are going to finalise the Damage Need Assessment report on Friday (Sept 16) which will present the real picture of the total damage caused by flash floods. However, the actual report would be finalised by October 15. However, the EAD officials admitted that financial inflows for the flood relief are little compared to other assistance.
The minister also informed the committee about the delay in different foreign-funded projects. He said that due to inordinate delay, the Jamshoro power generation project has been sent to the Prime Minister’s Inspection team for an inquiry. He also said that the current portfolio of the World Bank in Pakistan $13 billion where $8 billion remained undisbursed. He further said that a project of auto metering worth $45 million was closed by the previous government. However, the incumbent government is now working to divert these funds to other projects.
The committee was informed that Pakistan’s external public debt were $71.126 billion as of June 2018 which increased to $88.836 billion by June 2022. It was further revealed that the external public debt includes over $9.481 billion of commercial loans on which the government is paying 5-7 percent interest with little maturity period compared to bilateral and multilateral loans at the rate of 2-2.5 percent. The federal minister for the EAD updated the committee regarding foreign-funded projects and working of the National Coordination Committee (NCC).
Projects are rated as satisfactory, moderately satisfactory and problematic, on the basis of disbursement target, time run-over, additional commitment charged and project rating. In this connection, the focal point of the ministry is to review problematic projects, track implementation delays and recommend measures to address impediments. The minister informed the committee that the progress on all the projects is monitored, on a daily basis, through the dashboard for taking necessary measures.
The ministry has limited available funds and optimum utilisation of these funds is a challenging task. The committee desired a detailed briefing, by the concerned ministries, on the problematic projects relating to the energy and water sectors, in the next meeting.
Copyright Business Recorder, 2022