ISLAMABAD: The Ministry of Economic Affairs has revised upward by Rs402 billion repayment of short-term foreign loan and servicing of foreign debt following the depreciation of the rupee against the dollar and sought approval of grant from the Economic Coordination Committee of the Cabinet.
The ECC meeting presided over by Finance Minister Ishaq Dar approved the Rs402 billion technical supplementary grant (TSG) after the meeting was informed budget estimates were prepared for the fiscal year 2022-23 on the basis of parity exchange rate of Rs186 per US dollar, whereas, actual repayments have been made at average exchange rate of Rs235 per US$.
As a result, the repayment of short-term foreign loans was revised upward to Rs330.625 billion from the budgetary estimate of Rs142.771 billion for the ongoing fiscal year and servicing of foreign debt to Rs725.389 billion from Rs510.97 billion, added the ministry.
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The ECC was requested that as the debt repayments are obligatory, it is, therefore, requested that the TSG amounting to Rs402.251 billion may be approved.
The Ministry of EAD added that as per Rules of Business 1973, it is responsible for among others, external debt management, including authorisation of remittances for all external debt servicing, compilation of data, accounting and analysis of economic assistance from foreign governments and organisations.
Additionally, the EAD Ministry is also responsible for making repayments of foreign loans and credits contracted by the federal government for projects, and other borrowings arranged by the Finance Division including short-term borrowings. Eurobonds and Sukuk Bonds, etc.
And for this purpose, the EAD, for budgeting purposes, is required to prepare budget estimates for debt servicing of foreign loans and credits obligated upon federal government budget.
Accordingly, for the financial year 2022-23, estimated budgetary allocations were Rs4,446 billion for servicing of foreign loans and credits while revised estimates have been prepared amounting to Rs4,044 billion for the current financial year 2022-23.
The ECC was further informed that the revised estimates for fiscal year 2022-23 indicate, on the one hand, saving of Rs804 billion in one demand, whereas, on the other hand, excess expenditure of Rs402 billion (Rs187.853+214.398 billion) in another demand.
In order to meet the excess expenditure, the EAD requested that the TSG of Rs402.251 billion is required (Rs187.853 billion for repayment of short-term foreign loans and credits and Rs214.398 billion servicing of foreign debt.
Copyright Business Recorder, 2023