ISLAMABAD: The Senate Standing Committee on Economic Affairs was informed Thursday Pakistan has taken the loan from the International Monetary Fund (IMF) at a high interest rate of 5.09 percent in the year 2023 under the Stand-By Arrangement (SBA).
This was stated by officials of the Ministry of Finance and State Bank of Pakistan (SBP) during a meeting of the Senate Standing Committee of Economic Affairs held here on details of the IMF funds received by Pakistan from the first IMF programme till June 2024.
The meeting of the committee was held at the Parliament Lodges under the chairmanship of the Committee Chairman, Senator Saifullah Abro, on Thursday.
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The meeting was further informed that the country has taken the loan from the IMF at a high interest rate of 5.09 per cent in the year 2023. Pakistan had received a standby arrangement of $3 billion from the IMF in the year 2023.
Why was Rs90 billion spent on political schemes after taking a loan from the IMF? the chairman of the committee inquired.
The committee sought details of the utilisation of the loan borrowed from the IMF.
The meeting was told that the IMF has so far disbursed 2,126 million SDRs to Pakistan and the Fund has to be repaid over $6.36 billion SDRs over next three to five years. Since 1984, SDRs and the country had paid $2,439 million as interest to the IMF since 1984.
Every time, the balance of payments problems propelled the country to go to the IMF, said officials of the State Bank.
The committee was given a detailed briefing about all the ongoing and completed projects of the Power and Water Resources Division, including proposals related to these projects, the tendering process and the latest progress, including the interest paid by the federal government and the concerned departments and other related matters.
The committee was also given details of the IMF funds from the first programme till June 2024 (as per approved programme) and year-wise details of amount received, amount repaid and interest paid by the government.
The parliamentary body was provided details of internal and other loans received by Pakistan and details of repayments and interest other than PSAs details of loans taken from banks, private sector loans, intercompany loans and details of total liabilities.
Officials further informed the committee that Pakistan has entered 24 full programmes and 4 one-time facilities with the IMF. Pakistan signed its first programme in 1958 and the most recent one was the 2023 Stand By Arrangement (SBA).
As per the records available, Pakistan has drawn an amount of SDR 21,260.08 million since 1958 from the IMF. The outstanding principal amount is SDR 6,369.16 million as on 30th June 2024.
The interest payments from 1984 until 30th June 2024 which represents interest payments on outstanding balance of the General Resources Account is SDR 2,439 million, officials informed.
The facility/programme wise details of the interest paid on the IMF programmes have been calculated at the directions of the Committee. The committee was informed that the year-wise interest payments on Eurobonds, Sukuk’s principal and interest payment serviced by the federal government included; in 2005 principal amount was paid $156 million and interest was paid $291 million; in 2006 interest was paid $582 million; in 2007 $599 million; in 2008 interest paid $488 million. And in 2009 principal amount was paid $500 million and interest was paid $361 million, in 2010 principal amount was paid $600 million and interest $466 million.
Similarly, interest paid in 2011 was $503 million, in 2012 $368 million, in 2013 $357 million, in 2014 $333 million, in 2015 $188 million while in 2016 principal was paid $500 million and interest $111 million, in 2017 principal amount was paid $750 million and interest $111 million, and in 2018 interest was paid $111 million.
The meeting was informed that in 2019 principal amount was paid $2,000 million and interest was paid $121 million and in 2020 interest was paid $155 million, while against in 2021 principal amount was paid $1,000 million and interest was paid, $185 million.
Likewise, in 2022, principal amount was paid at $1,000 million and interest was paid $172 million and in 2023 interest was paid $109 million. The meeting was informed that in June 2024 principal amount was paid $1000 million and interest amount of $55 million
At present Eurobonds outstanding (June 2024) is US$ 6,800 million. The year wise domestic debt and Eurobonds has also been calculated on the direction of the committee.
Details of loans and interest from IMF presented to the committee. The meeting was informed that so far 21,260 million SDRs have been borrowed from the IMF and repayable to the IMF is SDR 6,369 million.
A total of SDR 2439 million interest has been paid on loans to the IMF so far, and a total of 28 programmes have been undertaken from the IMF with 24 full-time, four one-time programs.
The entire loan for the 2008 and 2010 programme has been repaid, the meeting was informed by the officials of central bank that the IMF interest on both these programs was paid 1.58 percent, they added.
The meeting was told that there was 5.09 percent rate on standby arrangement of 2023. The meeting was further informed that between 2008 and 2023, six programmes were done with the IMF. Agha questioned that in 1958, Pakistan lent to Germany then why did we need to go to the IMF in 1958.
The meeting was informed that the reason for going to the IMF was at that time trade balance and for balance of payments the country has taken IMF loan.
Agha asked as to how much the country need to pay to the IMF this year, the official responded that they do not have these details right now and will let the committee know after checking.
The Standing Committee was also informed about the details of the ongoing multilateral and bilateral projects. Regarding multilateral, water and power sector projects, the standing committee was told that there are a total of 23 projects, including 10 projects of EDB, 10 of World Bank, 8 of European Union, 1 of OPEC Fund, etc, which are worth about 5,908 million dollars. 2,012 million dollars have been spent. There are 26 bilateral development projects worth 1,788 million dollars and 7,43 million dollars have been spent on them till June 2024. Bilateral projects have been carried out with Japan, Kuwait, Germany, France, USAID and Saudi Arabia.
The committee was also briefed in detail about the projects completed since 2010 in the water and power sector. Committee Chairman Senator Saifullah Abro said the agenda had asked for the details of the projects since 2002, but the standing committee was not provided complete information.
He informed the standing committee about the ongoing projects of power and water sector under the World Bank. Regarding the 5th expansion project of Tarbela Dam hydropower, it was informed that this project was started in 2017 and will be completed in June 2022. It will be completed in September 2027. It will generate 1,410 MW of electricity. 500KV double circuit line is also included. 33 per cent of the construction of electro-mechanical works has been completed. The work on the tunnel will be completed in 2027. Many problems also came up. Senator Kamil Ali Agha said that why his PC1 is being revised and how much additional money will have to be given. There is a loss. The burden of taxes increases on the poor man who can hardly afford even two meals a day.
Officials told the committee that there was an issue of right-of-way in the transmission line and registration.
The committee was told that Dasu Hydropower is a stage one project, 2,160 megawatts of electricity will be generated and the project is worth 588 million dollars.
It was supposed to be completed in 2024. The progress of KKH redesign is 40 per cent colony, 70 per cent and 132KV transmission line is 96 per cent.
There are some issues regarding power house and new sites of KKH. Land acquisition and security are also some issues. Dasu hydropower project is expected to incur financial loss due to delay in construction Dasu hydropower project will be completed in 2028 instead of May 2025. The Dasu Hydropower project was signed in August 2014. So far 15 per cent of the expenditure has been spent on advance mobilization, but the physical plan is not visible.
Regarding Dasu transmission line, the standing committee was told that the project of 765kV line was approved in October 2020 for 700 million dollars. This project consists of 3 lots. The first lot project is worth 330 million dollars which started on February 10, 2023. It was tendered in February 2020 and its bid was opened in November 2021. The committee was told that Lot 1 has 604 towers while Lot 2 has 280 towers. The construction cost of the Lot 2 towers is 186.4 million dollars. It was revealed in the committee meeting that the foundation of the 604 tower of Lot 1 has not been done yet.
The standing committee also expressed concern over this. The project of Lot 3 is worth 135.9 million dollars and the progress on this project is only 17.5 per cent. The committee chairman said how this project will be completed on time. He said the work on the project should be started as soon as the phase construction is completed. The committee expressed concern over the non-participation of the Federal Minister for Economic Affairs in the Standing Committee meeting.
The chairman and members of the committee said numerous matters improve upon the participation of the relevant ministers in the committee meeting and it becomes easier to decide on many issues.
Chairman Committee Saifullah Abro said if the working papers are provided, the members of the committee can examine the issues in detail and formulate recommendations for effective measures.
Copyright Business Recorder, 2024