Elahi Bakhsh
According to the newly released report of the Ministry of Finance, in the first nine months of the financial year 2020-2021, our primary balance remained at a surplus of Rs 562 billion. However, we are facing a fiscal deficit of 1.652 trillion which is 3.6% of our GDP. In these nine months, our revenue stood at Rs 4.99 trillion while our expenditure stood at Rs 6.644 trillion. Of the expenditure, we spent Rs 2.1 trillion as mark-up payment (interest on loans).
The amount of deficit we will obviously pay off by borrowing. The practice of borrowing for development projects has brought us here. International financial institutions, based on malicious and inaccurate statistics, advise poor countries on development projects and encourage them to work on these projects by taking loans. These projects do not deliver the previously estimated profits. As a result, we collect so little revenue from these projects that we can hardly spend on their operational cost, let alone on the loans taken for them.
Over the last few years, the markup of all these loans is maturing and more loans are being taken to repay them. This series is not going to stop. One solution is to strengthen our economy so that we don’t have to borrow again to pay for the markup. But this solution will take a long time which we cannot afford; because in the meanwhile more debts will have gone up.
The second and easiest way is to set up a commission and find out which rulers and their subordinates have allowed borrowing from financial institutions in the name of development projects and after passing a bill in Parliament let these loans be repaid by them.
Note: The statistics and global financial institutions listed in the post are from authoritative sources. Everything else is a personal opinion that can be disputed.
(The writer is Lecturer in Political Science at the Govt Degree College, Booni).