Pakistan to return $10b foreign debt in FY 2019-20

Minister for Economic Affairs Hammad Azhar on Thursday informed the National Assembly that the government would return over $10 billion foreign debt during the current fiscal year.

Replying to various supplementary questions during Question Hour, the minister said the incumbent government returned US $ 8.39 billion foreign debt from August 18, 2018 to June 30, 2019.

He said PTI led government obtained US $ 7.1 billion foreign loan during the said period. He said past government had obtained loans on short terms during last two years of its tenure which had to return.

The minister said the foreign debt on August 18, 2018 was US $ 73.1 billion.

To another question, he said debt to GDP ratio had exceeded from the limit during the tenure of past government. However, he said that the incumbent government was making efforts to bring it down to the prescribed limit.

He said external debt witnessed only $ 2.3 billion during the tenure of present government. He said the government cleared record Rs145 billion refund cases. The minister said the stock of outstanding external debt of Pakistan till May 2019 stood at Rs10,838 billion. In order to resolve economic issues, the government was introducing comprehensive set of economic and structural reforms particularly focusing on export, re-establishing fiscal stability and improving governance in key utilities and state owned enterprises.

Regarding devaluation of rupee, Hammad Azhar said that the recent movement in the exchange rate reflected resolution of the macroeconomic imbalances accumulated over the past few years when the rupee was kept overvalued, the increased demand for imported goods led to widening of the current account deficit to unmanageable levels putting severe pressure on the country's foreign exchange reserves.

As a result of the demand-supply gap in the foreign exchange market, rupee depreciated by 13.7 per cent in FY 18 and 24.1 per cent in FY 19. He said Pakistan's current exchange rate regime was flexible and market determined. The State Bank, however was committed to addressing disorderly market behaviour, he said.

The consumption of Liquefied Petroleum Gas (LPG) stood at around 40,921 Metric Ton (MT) during a 14month period from April 2018 to May 2019 across the country.

Domestic, commercial and industrial consumers used 3,174 MT LPG in April, 3,077 MT in May, 2,661 MT in June, 2,680 MT in July, 2,684 MT in August, 3,027 MT in September, 3,264 in October, 2,630 in November and 3,272 MT in December 2018, while 4,357 MT in January, 2,961 MT in February, 1,715 MT in March and 2,971 in April and 2,448 MT in May 2019, a senior official in Oil and Gas Regulatory Authority (OGRA) told APP.

Replying to a question, he said the authority, being a regulatory body, wrote letter to chief secretaries of all provinces periodically requesting to keep check and take action against illegal decanting of LPG and unregistered factories manufacturing substandard cylinders and equipment in their respective areas.

"We (OGRA) are a regulatory body and not police force or enforcement directorate, so the chief secretaries are asked to take action against such illegal activities, which are curbed through relevant district administration from time to time," he said. Replying to another question, the official said an effective mechanism was in place to hold regular inspection of registered LPG cylinder and equipment manufacturers, adding in case of any violation, fine was imposed and sometimes such factories were delisted.

After receiving information about any unlawful or poor quality production, he said, local officials of OGRA along with police raided the identified factories and imposed fine besides taking legal action against them. Currently, as per details placed at OGRA's official website, around 56 LPG equipment manufacturers are registered with the authority.

Commenting on the registration procedure of the manufacturers, the official said applicants applied for setting up production units, following which third party inspectors were sent to visit the proposed sites, and on completion of all codal formalities, permission was granted.