January 17, 2008	Thursday	Muharram 07, 1429

KARACHI, Jan 16: The Pakistan People’s Party on Wednesday expressed concern at the reports of a new record of government borrowings that crossed the Rs1 trillion mark in the wake of “poor performance” of a variety of economic indicators in the ongoing financial year 2007-08.

According to State Bank of Pakistan figures, the net government sector borrowing from the banking system touched Rs243.942 billion from July 2007 to January 6, 2008. It was Rs63.497 billion during the corresponding period of the financial year. The SBP statistics show that the government budgetary borrowing stock on June 30, 2007 stood at Rs810.053 billion. After the first half of the current fiscal year, it rose by Rs243.942 billion, pushing the overall government budgetary borrowing stocks to Rs1,054 billion.This is the first time in the country’s history that government borrowing has crossed the Rs1 trillion mark. According to economic experts, the increased borrowing will fuel inflationary pressures though people are already battling with a skyrocketing inflation.

“For the past eight years, we have been consistently pointing out that the so-called economic growth of the country is based on extremely weak foundations, and it now seems that the paint, gloss and shine put on by the regime to present the picture of a prosperous economy is finally wearing down,” said Sherry Rehman, PPP Central Information Secretary, on Tuesday.

Ms Rehman said that selective and pro-rich development, fudged figures, heightened poverty, economic disparities, record food, health and housing prices and shortages of most basic commodities have been the hallmark of this regime. “For the eight years of its presence in office, it sought to benefit a selected group of individuals and served their interests only. Clearly, what we are seeing today is the collapse of an economy riding on the back of individual power. The poor never have, and never will benefit from the policies of the regime,” she said.

She noted that wheat import had been notified as part of the reason behind increased government borrowing. “The government is making people pay the price for its corrupt policies. The country was never to suffer a wheat crisis if the regime had not rushed for wheat export to benefit its political allies. As a result, Pakistani wheat is now available almost all over the world, but not in Pakistan. It is ironic that despite claiming a ‘bumper crop’ last year, the regime was importing wheat worth $400 million (in September ‘07) to meet the local demand,” she added.

Heavy dependence on privatisation

The PPP leader observed that the increased government borrowing came in the wake of little privatization activity during the last many months, which also confirmed that the regime had been depending heavily on funds from the privatization exercise to be used for deficit financing. “This explains why it displayed a mad rush to sell off all important state assets at throwaway prices,” she noted.

She said that the State Bank’s tight monetary policy, which clearly had its disadvantages, was meant to control the inflationary pressure. However, the increased government borrowing had eaten into the tight monetary policy. “It means that it was the public, and it is the public, that will pay through its nose for the policies that never represented its economic aspirations in the first place,” she added.

Ms Rehman said that the regime had ample opportunities to fix the imbalances in the economy. “However, it left all unpopular decisions on the next government, and continued to use its propaganda machinery to concoct misleading information on economic fundamentals.