Saturday, January 29, 2011

The clock is ticking

Govt has crossed borrowing limit, say senators 

The government has crossed the borrowing limit prescribed under the Fiscal Responsibility and Debt Limitation Act, 2005.

During the question hour in the Senate on Friday, Senators Haroon Akhtar and Prof Khursheed Ahmed said that under the law, the public debt must not exceed 60 per cent of the GDP. But a recent briefing given to a Senate panel by the State Bank clearly indicated that borrowing had gone up to about 64 per cent of the GDP.

The law requires the government to seek an approval from the parliament if it wants to exceed the limit on account of unforeseen expenditure warranted by a calamity or a national security issue.
Minister of State for Finance and Economic Affairs Hina Rabbani Khar initially denied that the limit had been crossed, claiming that “we are just on the borderline”.
But on the insistence of the members, she said the government would take up the matter in parliament if this indeed was the case.

She said that as on Sept 9, 2010, the outstanding public and publicly-guaranteed debt was about $53.8 billion, including $43.9 billion medium- and long-term loans and $8.9 billion from IMF. She said the government had acquired Rs1.527 trillion from domestic sources from November 2008 to October 2010.
During the last quarter, the government took a loan of Rs80 billion from the State Bank and Rs204 billion from commercial banks, but paid back the amount, the minister said.

Answering a question, she said the government had provided subsidy of over Rs412 billion to Wapda and Pepco over the past five years. She said that Rs19.5 billion was paid in subsidy during 2005-06, Rs41.9 billion in 2006-07, Rs113.6 billion in 2007-08, Rs90.4 billion in 2008-09 and Rs146.5 billion in 2009-10.
She said the government was paying subsidies to Wapda and Pepco, picking up the difference between the tariff determined by Nepra and the one notified by ministry of water and power.

Ms Khar said that Rs1.8 trillion had been allocated for subsidy during the current year, including Rs30 billion for Pepco, Rs40 billion for payment of circular debt and Rs38 billion for payment of bills in Fata.
For subsidy in energy sector, Rs130 billion was allocated of which Rs100 billion had been paid so far.
She said the rising price of oil in the international market ultimately caused increase in subsidy, adding that the smart meter scheme had been introduced to check power theft.

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