World Economy

Pakistan Foreign Debt Down

Pakistan Foreign Debt DownPakistan Foreign Debt Down

Pakistan’s National Assembly was informed that there was shortfall in tax collection target in the first quarter of the current fiscal year.

Parliamentary secretary for finance, Rana Afzal Khan told the assembly that he hoped the tax target would be met in the ongoing quarter, APP reported.

He informed the house that the foreign debt which had reached 63.3% of GDP during the previous government, has now been reduced to 61% and would be reduced further by the end of this financial year.

He said the foreign loans received during the tenure of the present government from June 5, 2013 to September 2014 stood at $9,750.87 million. These loans do not include the bonds worth $3,499.35 million and the loan of $4,769.10 million provided by the International Monetary Fund.

As per the law, the government cannot take borrow more than 60% of the GDP, he said, adding that the government was aware and would not think of crossing this limit.

He added that the government was focusing on strengthening the economy, reducing energy costs, enhance exports and reduce cost of doing business which would help develop the country on sustainable grounds.

Regarding the sale of Heavy Electrical Complex, Rana Afzal told the assembly that the complex was to be sold to the highest bidder Cargill Holdings Ltd, however the company failed to make the balance of payment of Rs225 million ($2.1 million), so the privatization commission revoked the letter of acceptance.

 Economy Stable

Moody’s Investors Service recently changed the outlook for the Pakistan’s banking system to stable from negative reflecting the improvement in the economic growth prospects.

“We expect strengthening the economy, together with the central bank’s accommodative monetary policy to stimulate lending growth and support the banking sector’s loan performance over the next 12-18 months,” said Moody’s Assistant Vice President Elena Panayiotou.

Moody’s forecasts Pakistan’s real GDP will expand by 4% in the fiscal year ending June 2016 (compared to a sluggish 2.8% during 2008-13), mainly driven by higher spending on infrastructure projects as the government of Pakistan aims to ease energy shortages and execute projects associated with the China-Pakistan Economic Corridor, Moody’s reported.

The rating agency noted that the strengthening of the domestic economy will contribute to the improvement in Pakistani banks’ asset quality. “We expect problem loans will decline to around 12% of total loans by the end of 2016 compared with 12.4% for the end of June 2015. Banks will remain heavily exposed to the low-rated Pakistan sovereign, linking the banks’ credit worthiness to that of the sovereign,” said Panayiotou.