(By Mehtab Haider, 05/11/15): One may believe it or not but it is a fact that Pakistan has received only $708 million net transfers on annual basis in the shape of foreign loans and grants from all multilateral and bilateral creditors during the last 15 years under both military and democratic regimes.
At a time when Islamabad is facing pressures on nuclear programme and other issues, the policymakers can make the US and its western allies realise that Islamabad had received just peanuts, compared to its actual losses amounting to $107 billion after becoming part of the US-led war against terrorism since 9/11, 2001.
According to an official presentation, given by top wizard of economic ministry and exclusively available with The News, the total disbursement of foreign economic assistance (FEA) including all loans and grants from all creditors stood at $49.952 billion from 2000-01 to 2014-15.
On an average, the disbursement of loans and grants stood at $3.330 billion annually, while average repayments stood at $2.622 billion during the last 15 years, indicating that the annual net transfer and inflows from the World Bank, ADB, IDB and all major donor countries including the US, UK, Japan, Saudi Arabia and others stood at just $708 million annually.
When contacted for comments, former special secretary finance Dr Ashfaque H Khan said the country had plunged into a debt trap where loans are being acquired to repay the debts. He said the bilateral assistance had shrunk and multilateral loans were increasing in the aftermath of signing of loan agreements with the IMF.
“We are borrowing today extensively to repay loans obtained by the previous regime. What the incumbent regime was borrowing would be repaid by the future governments by taking more loans,” he said and added that it was exactly called a debt trap. The average cost of borrowing has stood at 1.6 per cent during the last 15 years.
The available details with The News reveal that during the Musharraf regime in 2000-2001, all multilateral and bilateral creditors disbursed $2.471 billion in shape of loans and grants to Pakistan and Islamabad paid back $2.099 billion including $1.348 billion as principal amount and $752 million as interest repayment. Therefore, the net transfer of FEA stood at just $372 million during this year.
The donors disbursed $3.236 billion loans and grants during 2001-02 and Islamabad paid back $1.783 billion including principal amount of $1.178 billion and interest repayments of $605 million, showing net transfer of foreign assistance of $1.453 billion.
It was fiscal year 2002-03 when the donors disbursed $1.922 billion for Pakistan’s economic assistance and Islamabad paid pack $1.827 billion including principal amount of $1.159 billion on account of loan and $668 million interest payment, showing that the net transfers to Islamabad stood at just $95 million.
There was one financial year 2003-04 during the Musharraf regime when Pakistan paid back more and got less foreign assistance as the country received $1.5 billion disbursement of loans and grants but paid back $3.460 billion in shape of $2.721 billion as principal amount and $739 million interest repayment so the net transfer was negative $1.960 billion.
In fiscal year 2004-05, the donors disbursed $2.738 billion loans and grants for Pakistan and the country paid back $1.747 billion including principal amount of $1.072 billion and interest repayment of $674 million, indicating that the net foreign assistance stood at $991 million.
Pakistan received gross foreign assistance of $3.394 billion during 2005-06 but Islamabad paid back $2.163 billion including $1.446 billion as principal amount and $716 million as interest repayment so the net transfer stood at $1.231 billion.
The donors disbursed $3.410 billion during fiscal year 2006-07 and Islamabad paid back $2.025 billion including principal amount of $1.203 billion and interest repayment of $822 million so the net transfer to Islamabad was standing at $1.385 billion.
In financial year 2007-08, the donors disbursed $3.798 billion as loans and grants but got back $2.116 billion as debt servicing including principal amount of $1.113 billion and $983 million as interest repayments.
During the Musharraf regime from 2001 to 2008, the donors had disbursed gross amount of $22.469 billion as loans and grants but the country had to paid back $17.220 billion as debt servicing including $11.260 billion as principal amount and $5.595 billion as interest repayments so the net transfers of economic assistance to Islamabad was just standing at $5.249 billion.
During the tenures of democratic regimes, starting from 2008-09 the donors disbursed $4.885 billion to Pakistan while the country paid back $3.439 billion as debt servicing including $2.566 billion as principal payment against loans and $873 million as interest repayments so the net transfers stood at $1.446 billion.
In 2009-10, the country received gross foreign assistance to the tune of $4.005 billion but paid back $3.120 billion as debt servicing so the net transfer stood at $885 million.
There was another financial year 2010-11 when Islamabad had paid back more than received amounts as the gross foreign assistance stood at $2.627 billion while the country paid back $2.737 billion as debt servicing so the outflow of dollars from Pakistan stood at $110 million.
In fiscal year 2011-12, the donors disbursed $3.335 billion as loans and grants and Islamabad paid back $2.299 billion as debt servicing so the net inflows of dollars stood at $1.036 billion.
It was third year in 2012-13 when Islamabad had to pay back more to donors than receiving dollars during the last 15 years’ economic history of the country as the country received $2.891 billion while it had paid back $3.006 as debt servicing so the net outflow of dollars stood at $115 million.
Pakistan received gross economic assistance of $4.927 billion from donors during 2013-14 while the country paid back $3.727 billion so the net transfer was standing at $1.2 billion.
In 2014-15, the donors disbursed $4.813 billion as loans and grants but the country paid back $3.783 billion as debt servicing so the net outflows of dollars stood at $1.030 billion.
In totality from 2009 to 2015, the country under democratic regimes received gross foreign assistance of $27.483 billion but paid back $22.111 billion as debt servicing including $16.436 billion as principal repayment and $5.675 billion as interest repayment so the net transfer of foreign assistance stood at just $5.372 billion.
The grand total shows that the donors disbursed $49.952 billion but got back $39.330 billion as debt servicing including $27,696 billion as principal amount and $11.634 billion, so the net transfers of foreign loans and grants stood at $10.622 billion during the last 15 years from 2000-1 to 2014-15.
When contacted on Saturday, Dr Faisal Bari said Pakistan would have to mobilise its domestic resources and to boost exports to manage debt burden effectively. Without removing structural bottlenecks being faced by the economy, the country could not come out of the debt trap, he added.
When contacted, one top official of Finance Ministry said the net foreign inflows were not as high as being believed in many quarters. He said the present government possessed a comprehensive debt strategy aiming at reducing debt burden and its servicing in order to bring it in accordance with repaying capacity. After taking over power in 2013, the government placed a medium-term debt management strategy (MTDS) for year 2014-18. Now the government, he said, was going to update its MTDS by December 2015 in order to reduce the debt to GDP ratio below 60 per cent of GDP over the next three years. He said the debt to GDP ratio stood at over 63pc of GDP which would be brought down to below 60pc of GDP over the medium term.
Source: http://www.thenews.com.pk/Todays-News-2-349549-World-paid$4995-bn-in-15-years-to-compensate-$107-bn-Pak-losses
