Apropos Dr Hafiz A Pasha's article "Issues in debt management" carried by the newspaper on Friday, the writer has brought under the spotlight a very important point or the main plank of the present government's economic strategy. According to him, "the government has pinned its hopes on receiving large external financing of $34 billion from China for energy and other infrastructure projects.
While this will add substantially to power generation capacity, it will lead to a big increase in the external debt and also have implications on the balance of payments due to amortisation payments, repatriation of profits and cost of coal imports. For external debt sustainability, exports will have to show a corresponding increase from the additional supply of power. Otherwise, external debt sustainability will become a very serious issue."
The present government owes its existence to its predecessor's profound failure on the energy security front. But it has also failed to overcome this challenge in an effective and meaningful manner. That Shahbaz Sharif the Punjab Chief Minister, and his party colleagues in the federal government are desperate for the resolution of electricity issue is a fact that has found its best expression in external long-term financing of $34 billion from China for energy. They, however, appear to be unmindful of the consequences of alarming rising debt.