Pakistan to sell PSEs to settle debts

29/11/2015 06:07 AST

The government of Pakistan informed the National Assembly on Saturday that it planned to clear off its debt liabilities by selling public sector enterprises (PSEs).

In an otherwise lacklustre session, a parliamentary secretary claimed that PML-N had received people’s mandate on its election manifesto that included privatisation of national entities.

Finance Minister Ishaq Dar said in a written answer to a question that the total domestic debt stood at Rs18, 093 billion at the end of September and Rs1, 304b was spent on debt servicing during 2014-15.

He said the government wanted to enhance its debt repayment capacity through resource mobilisation, by increasing the tax-to-GDP ratio from 11 per cent to 13pc by 2017-18 and repaying expensive domestic debt with concessional external loans.

He said the government was trying to boost economic activities, increase foreign exchange reserves, restore international investors’ confidence and achieve fiscal discipline.

“Furthermore, privatisation of various public sector enterprises is under process - 90pc receipts of privatisation will be used for debt retirement,” Dar said. He said the fiscal deficit was expected to drop to 4% of Gross Domestic Product in 2016-17 from 5.375% recorded in 2014-15.

The enhanced fiscal space will reduce the government’s borrowing and augment its repayment capacity.

In reply to another question, he said the government had received $18bn foreign loans by Sept 30. These included $3.5b bonds and $4.77b received from the International Monetary Fund. He said the budget estimates for repayments were prepared on the basis of the schedules agreed under the loan agreements.

Bank deposits in Pakistan surged seven-fold to Rs9.153 trillion ($88.86 billion) during the last 15 years as there was a growth in money supply and the central bank’s efforts encouraged deposit mobilisation in this period, official data showed.

But, low interest rates environment, which hurts savings, are a biggest impediment to deposit mobilisation in near future.

Pakistan’s commercial banks held Rs1.276 trillion in June 2001. This figure rose Rs7.876 trillion at the end of June 2015, the State Bank of Pakistan’s (SBP) data showed.

The Gulf Today