Foreign loans: Debt servicing surpasses net loans' disbursement in 2010-11, NA told

ZULFIQAR AHMAD

ISLAMABAD: The debt servicing of Pakistan, which includes repayment of instalments on principal amount and interest on foreign loans amounted to $2.7 billion, higher than the disbursement of net loans of $2.6 billion made in 2010-11.

In a written reply to a question raised by Pervez Malik, a PML-N lawmaker, finance minister Dr Abdul Hafiz Sheikh told National Assembly that external debt was repaid to the lender as per agreed schedule for each loan.

The accumulative net capital inflow during the last five years has maintained a positive ratio, which is due to the better financial management of the government in time of financial crisis faced by the country, he added.

The minister has attributed the improvement to steps taken for streamlining the balance sheet, which included portfolio review by both finance minister and secretary Economic Affairs Division (EAD) with implementing agencies on regular basis.

Improving macro-economic outlook for recommencing programme lending, the minister added, was also one the steps taken by the government regarding foreign lending. The minster said that it has been suggested to explore other avenues of capital inflow through privatization.

Moreover, for repayment of foreign loans, Sheikh added, funds are provided by finance division each year in the budget. The total disbursement in 2006-7 was $3.3 billion against the debt servicing of $2 billion, in 2007-8, total disbursement was $3.7 billion, while the amount paid for debt serving was $2.1 billion, in 2008-9, total disbursement of loans/grants was $4.7 billion whereas debt servicing was $3.5 billion while in 2009-10, the disbursement was $3.7 billion against the debt servicing of $3.1 billion.

Meanwhile, in response to a question about total number of pending cases for refund of sales tax of textile industries in FBR, the finance minister, in a written reply said that at present there were 12427 refund claims and the total amount of refund claims was Rs6980 million.

About impacts of International Monetary Funds (IMF) programmes on Pakistan economy, the minister said that the last Standby By Arrangement (SBA) that ended in September 30, 2011, resulted in improving the current account balance, stable exchange rate and foreign exchange reserves were recorded at historically highest level with stable inflow of foreign remittances.

The minister also claimed that inflation was reduced from 25 percent in 2008 to 14 percent in September 2011, adding that the reform process initiated because the programme is still being pursued actively.

"The reforms initiated by the IMF programme are continuing and fiscal discipline is being maintained in a manner as during the currency of the programme," he added.

About rampant increase in armed robberies in different banks, he said that during the second and third quarters of 2011, the robberies increased due to poor law and order situation, hiring of guards from private security companies and low salaries for the guards.

The banks which affected during January to November 2011 included UBL, HBL, MCB, Dubai Islamic Bank, Bank Al-Habib, Faysal Bank, Habib Metropolitan Bank, Allied Bank, Meezan Bank, Bank Alfalah, Albaraka Bank, KASB Bank, Askari Bank, Bank of Punjab, Bank Islami, Summit Bank and NIB Bank.