Govt paying loans obtained by previous govts: Adviser PM
30 August, 2019
ISLAMABAD: Adviser to the Prime Minister on Finance Dr Abdul Hafeez Sheikh has said that blaming the current government for a phenomenal increase in public debt is unfair because it is also paying the loans obtained by the previous governments.
Talking to the media after addressing a two-day “First Central Asia Regional Economic Cooperation (CAREC) Capital Market Regulators Forum” here on Thursday, Dr Sheikh said Pakistan was going through transformation as the present government had inherited a massive debt burden.
“Consequently, there is an increase in debt servicing and it will be unfair to blame the incumbent government for adding more debt. There is a need to consider the fact that out of total revenue collection of Rs3.8 trillion in the last fiscal year, around Rs2.3tr was transferred to the provinces, while Rs2.1tr was for debt servicing,” he said, adding that the government had to take loan for running government, for defence and development projects.
“For the current fiscal year, we have earmarked Rs2.9tr for debt servicing and even the loans taken by previous governments will have to be owned by the present government,” he added.
Earlier addressing the forum, Dr Sheikh said capital markets could play a key role in financing economic growth by facilitating trade and investment flows. “As economies develop and investment projects become larger and more complex, efficient resource allocation and risk-sharing are facilitated by the development of capital markets,” he added.
The PM’s adviser said the government believed in transparency and the capital market was important for development of the private sector, while transparency in the capital market could be further increased with improvement in regulations. “Economic recovery is not an easy task as revenue is declining and despite some improvement a lot is needed to be done,” he added.
The forum was jointly organised by the Securities and Exchange Commission of Pakistan (SECP), Asian Development Bank (ADB), Central Depository of Pakistan and National Clearing Company of Pakistan Limited to discuss ways on how to improve capital markets by enhancing access to finance, supporting private sector development, spurring economic activities and strengthening regional cooperation and integration.
The speakers highlighted that the financial sector in most CAREC countries had been dominated by traditional financial institutions such as banks.
Capital markets in the region are also lagging behind, with some CAREC members ranked low in market capitalisation, according to the 2018 Global Competitiveness Report.
The CAREC Programme is a partnership of 11 countries — Afghanistan, Azerbaijan, China, Georgia, Kazakhstan, Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan and Uzbekistan — to promote economic growth and development through regional cooperation.
ADB Vice President Shixin Chen said the forum underscored the need to build strong and meaningful cooperation among the capital markets of CAREC members. “The region needs much more financing and investments than public sector resources can alone provide,” he said, adding: “Mobilisation of private sector funds, including through capital markets and long-term institutional resources, is critical to meeting development financing gaps of the CAREC region.”
SECP Chairman Amir Khan, in his welcome speech, said the forum was the first step to develop a strong network of capital market regulators in the CAREC region by providing an avenue for capital market regulators to exchange ideas and share best practices, besides promoting an inclusive reform agenda for attracting private capital for development and growth across the region.
“We have all witnessed how enhanced regional integration can work to the advantage of those who collaborate; it is time to jointly work for building synergies and pooling resources to achieve a shared success,” he added.
Mr Khan stressed the need for integration as an engine for growth, embracing technology as an enabler, linking capital markets with real economy and reducing regulatory barriers.
The forum included panel sessions and open discussions covering country case studies, as well as specific topics such as lessons from capital markets integration, derivative market development and financial technology’s regulatory and regional implications.
Representatives from the ministries of finance, central banks, capital market supervisory bodies from all CAREC countries and relevant industry professionals participated as panelists in various sessions to share and discuss best international practices with the participants.