(27 Nov 15) The government informed the National Assembly on Friday that it planned to clear off its debt liabilities by selling public sector enterprises (PSEs). In an otherwise lackluster session, a parliamentary secretary claimed that PML-N had received people`s mandate on its election manifesto that included privatization 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 Rs1,304bn was spent on debt servicing during 2014-15.
He said the government wanted to enhance its debt repayment capacity through resource mobilization, 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, privatization of various public sector enterprises is under process 90pc receipts of privatisation will be used for debt retirement,` Mr Dar said.
He said the fiscal deficit was expected to drop to 4pc of Gross Domestic Product in 2016-17 from 5.37pc recorded in 2014-15. The enhanced scale of 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 $3.5bn bonds and $4.77bn 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.
The IMF loan is meant exclusively to build foreign exchange reserves and has not been used for budgetary support needs. The amount is shown as part of the reserves (currently $19.92bn) with the State Bank being the custodian.
Replying to a supplementary question asked by the PPP`s Nafisa Shah, Parliamentary Secretary for Finance Rana Muhammad Afzal Khan said the government had decided in principle to privatize public sector entities both running in profit and making losses.
`Privatization was part of our election campaign and people have voted us into power. Hence questioning the government over its privatization policy doesn`t make sense.` Rana Afzal said the Pakistan Steel Mills had been a profitable concern but today everyone is aware of its state of affairs. Other PSEs would also be sold, he added.