The government is going on the path of previous Pakistan People’s Party government with regard to the economic policies as one loan programmes ends, it starts a new one. Every government of the world takes loans for development projects but the Pakistani government gets loans for debt servicing or to maintain foreign exchange reserves at a certain level. According to the data of the Ministry of Finance and Economic Affairs, the government has obtained at least $4.6 billion assistance over the past seven months, including $1.9 billion from China, $1.2 billion from foreign commercial banks and at least $1 billion through Sukuk Bonds. The money raised from commercial banks and Sukuk Bonds would utilized on budget financing and maintaining foreign currency reserves. According to experts, obtaining loans for non-development projects will create a difficult situation for the next government when it will have to make additional borrowings for debt servicing. The government had planned to get annual economic assistance of $8 billion for 2016-17 but out of which it has already obtained $4.6 billion during the last seven months.
China has emerged as the biggest donor and investor in Pakistan in recent years and the government looks toward Beijing to get money to meet the balance of payment requirements. Islamabad has either received or is likely to receive $1.3 billion from Chinese government and its commercial banks to meet the growing demand of cash and no one knows where the frequent acceptance of loans will lead the country to. The government has already obtained $700 million to meet budgetary and balance of payment requirements. This is addition to the burden of investment loans the country is receiving under China-Pakistan Economic Corridor. The volume of loans increasing bit by bit and day by day and unfortunately many loans are obtained and spent in non-development sectors. According to the government’s own sources, the country will have to return at least $6.5 billion to the external creditors in the next 15 months under the head of public debts. As a result, debt management and debt servicing will be a major issue for the economists in the country as the government has obtained a total of $25 billion loans during its three year tenure. The economists fear that the positive variables of the national economy will be lost if the government failed to stop taking foreign loans.
The government has successfully maintained financial stability but on the crutches of loans. The country is heading towards consumer economy and if the government cannot enhance its exports, at least it should increase the capacity of the industrial sector to produce consumer goods to meet the local demand.
