Staff Report
ISLAMABAD: Federal Minister for Economic Affairs, Sardar Ayaz Sadiq Tuesday said the government had focused on current debt situation and accepted the challenge. The Ministry of Economic Affairs, in collaboration with United Nations Development Programme (UNDP), organized a high-level seminar to initiate policy discussion and generate recommendations for the government, said a press release issued here.
Sardar Ayaz Sadiq, warmly welcomed all the participants including policy advisers, representatives of government, members of financial institutions, UN agencies and foreign development partners to deliberate on the current economic situation of the country and to propose sustainable solutions.
During his address, the minister highlighted that the seminar aimed at deliberating the existing and regional economic scenarios with relevance to Pakistan and was focused on current debt situation and challenges posed by it. Moreover, it proposed strategic recommendations and sectoral solutions for effective debt management to maintain financial stability and insulate Pakistan’s economy from external shocks.
The minister also stated that the global economic repercussions caused by the COVID-19 pandemic and ongoing Russian-Ukraine conflict had rapidly increased global prices of food and fuel and adversely affected not only Pakistan’s growth trajectory but the world over.
He also highlighted the problematic projects that were facing chronic delays on which he had stressed, during National Coordination Committee’s meeting, for regular follow-up meetings with executing agencies and stakeholders for due monitoring and prompt resolution of the issues.
Moreover, the minister apprised that the government was also taking provinces into confidence to resolve both short-term and long-term issues including water depletion issue for which a committee was also formed to resolve this issue between province of Sindh and Balochistan.
Mian Asad Hayaud Din, Secretary, Ministry of Economic Affairs, in his closing remarks, thanked United Nations Development Programme (UNDP), UN Wing of the Economic Affairs Division, guest speakers, experts, resource persons, and audience for attending the policy seminar.
He apprised that since 1950, Pakistan has received $184 billion of Foreign Economic Assistance (FEA) in the form of loans and grants from multilateral and bilateral development partners as well as from international financial and capital markets.
Out of total FEA, the share of loans was around 89% ($164 billion) and grant was 11% ($21 billion).
Interestingly, around 40% of the total FEA was received during 2011 to 2020 and 14% during the last 22 months (i.e. from July 2021 to Apr, 2022).
He also highlighted that from July, 1960 to April, 2022, Pakistan had received $73 billion as project aid to finance its socio-economic and infrastructure development needs.
Moreover, he stated that recently Policy Analysis and Development Wing of Economic Affairs Division had conducted study to estimate rate of returns on project aid in Pakistan by using project financing data for the period 1960-2020. The study found that in the case of Pakistan, the rate of returns of foreign aid was 18%. The finding was close to World Bank’s estimation of 21%.
In addition to that, he reiterated that the substantial increase in current account deficit coupled with enhanced external debt servicing posed a serious threat to Pakistan’s economy. It warrants to develop a strategy with concrete policy actions to cater the external finance challenges.
The policy seminar was further proceeded by various presentations by numerous Economy Experts on ‘Global and Regional Overview and Potential Solutions’ by Chief Economic Advisor at UNDP and ‘Fact Sheet on Pakistan Debt’ by Director General Debt Management Wing of Finance Division.
Moreover, open discussion on few of the thematic areas of Economy was also moderated by UN Wing of Economic Affairs Division.
