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N-League criticises ‘excessive borrowing’

June 02, 2012

ISLAMABAD: The Pakistan Muslim League-Nawaz has termed the federal budget disappointing and said financing of lavish government spending through ‘excessive borrowing’ had created macro-economic imbalance.

Senator Ishaq Dar, Leader of Opposition in the Senate, said at a press conference that the volume of domestic and foreign debt had doubled under the present government.

“The total national debt was Rs6,050 billion when former military ruler Pervez Musharraf left, but now the figure has reached Rs12,024 billion. I don’t know how will we pay it,” he said.

Senator Dar said “flawed and incompetent policies” had exacerbated the unemployment problem, which had gone up by 43 per cent from 2.3 million to 3.4 million since June 1999.

The country paid Rs459 billion in interest on domestic debt in 2008-09, but the amount had soared to Rs845.6 billion now, Mr Dar said.

Similarly, the amount spent on domestic debt retirement had risen from Rs2.55 trillion to Rs7.3 trillion because of the government’s weakness for loans.

“The government borrowed Rs939 billion from banks in the outgoing fiscal year against the target of Rs303 billion,” he said, adding that supplementary grants had reached Rs425 billion.

Mr Dar said that the supplementary grants had soared to 20 per cent from 18.2 per cent of current expenditure over the previous year.

“The heavy amount of supplementary grants reflects financial indiscipline of the government.”

Senator Dar, who was the first finance minister of current government when his party was a coalition partner of the PPP, expressed complete dissatisfaction over the budget figures.

“This budget has a low growth rate, reduced tax-to-GDP ratio to nine per cent and lowest foreign investment in 60 years which will result in increased inflation. Macro-economic imbalance, load of domestic borrowing, poverty and staggering agriculture sector are some of the worrying points in this budget,” he said.

He said the government had estimated current expenditures of Rs2,315 billion for 2011-12 but by the end of the year they reached Rs2,632 billion.

Senator Dar said all these policies had resulted in a very high inflation as prices of essential commodities like milk and pulses had increased by 300 per cent to 500 per cent.

As a result of high inflation, the country had witnessed a massive jump in poverty figures and this was the reason that the government had stopped including them in the Economic Survey, he said.

“But according well-calculated estimates, around 74 per cent of the population is earning just around $2 per day.”

The PML-N leader said energy growth was related to the overall economic growth rate and the government would have to take short-term measures like clearing circular debt and ensuring early completion of power projects like Nandipur.

“By taking such measures, over 4,000 megawatts of electricity can be produced.”

He said the Rs50 billion to Rs60 billion allocated for the energy sector was a meagre amount.

He said India had constructed dozens of dams. “How can we desire to bring an energy revolution with such a little amount?

“We need to understand that because of the energy crisis and some unfriendly factors, business is shifting from Pakistan to Bangladesh, Turkey and the Middle East,” he added.

The PML-N leaders criticised the government for not withdrawing discretionary powers of the prime minister, particularly in utilisation of development funds which stood at Rs25 billion to Rs29 billion.

They also criticised a provision for life-time security for presidents and prime ministers of the country.