Pakistan plans to seek $2 billion in foreign loans from the WHO and ADB for activities such as waste collection, pensions and fiscal reforms, and end-market distortion amid a rapid decline of public debt indicators.
The loans Pakistan wants to take from the World Bank and the Asian Development Bank (ADB) exceed the debt relief of $ 1.8 billion that Islamabad has sought from the G20 countries.
The Finance Ministry on Tuesday submitted more than half a dozen concept clearance letters for approval by the Central Development Working Group (CDWP), chaired by Planning Commission Deputy Chairman Jahanzeb Khan.
The CDWP meeting continued throughout the day and it approved some other projects. Concept approval letters will be considered for approval on Wednesday upon receipt of the CDWP again.
Once the CDWP approves the concept papers for these loans, the World Bank and the ADB's board of directors approve the loans.
The activities listed by the Ministry of Finance to obtain loans do not require any foreign financing. Political will is required to initiate these reforms.
All the concept papers lacked the "need for situation analysis and evaluation" according to the documents. The Finance Ministry has not justified the reasons for Moody's obtaining a loan in addition to the global debt rating agency - which Pakistan may default on its personal loan payments.
Pakistan's public debt is projected to increase to 37.5 trillion or 90% of GDP by June this year. This country will spend Rs2.8 trillion or 72% of the estimated Federal Board of Revenue (FBR) tax collection on public debt service alone this year.
When the Pakistan Tehreek-e-Insaf (PTI) government came to power almost two years ago, the public debt was Rs 24.8 trillion, it has been growing rapidly since then.
Prime Minister Imran Khan was vocal against ever taking foreign loans. But his government is also continuing the policies after its staunch political rival - Pakistan Muslim League-Nawaz (PML-N).
A statement issued by the Ministry of Planning and Development after the CDWP meeting said, "Seven concept clearance projects were presented at the meeting."
Punjab's government wants a $ 100 million or $ 16 billion loan from the World Bank for a "solid waste management efficiency program". The government's attitude indicates that it does not care about deteriorating debt indicators.
The Ministry of Finance also proposed $ 75 million in loans for pension reforms - an objective whose political will is required to declare that only those civil servants who will contribute pension under the defined contribution scheme.
Currently, the pension is funded from the budget and the government wants to introduce a contributory pension scheme.
Pakistan wants a loan of $ 300 million from ADB in the name of "development program of financial markets".
According to the documents, the funds were used by the Ministry of Finance, State Bank of Pakistan (SBP), Securities and Exchange Commission of Pakistan and Federal Board of Revenue to increase 'supply & demand, market assistance, and market stability' Will be done.
It is proposed to obtain another emergency loan of $ 500 million from ADB for the Kovid-19 Active Response and Expenditure Assistance Program. The project aims to purchase "protective kits for medical staff and online database management systems and sexually deviant kits."
However, the Ministry of Planning is of the view that the project only caters to the needs of Islamabad and there is no firm commitment from the ADB to provide loans.
Similarly, the government plans to take two budget support loans of $ 1 billion from the World Bank for fiscal management and improve the regulatory framework.
In the last nearly 10 years, budget support loans have become the preferred tool of all political governments to create foreign exchange reserves.
SBP led by Dr. Reza Baqir has now included a new method for creating foreign exchange reserves the 'hot foreign exchange'. This government policy has caused created more losses as the central bank had to artificially increase the exchange rate. During its first proceedings, the CDWP approved six projects worth Rs.16 billion and recommended a project worth Rs 25.2 billion to the Executive Committee of the National Economic Council (Acnec) for approval.
The CDWP has recommended a Ph.D. scholarship program under the US-Pakistan Knowledge Corridor program, which is worth Rs 25.2 billion for Acne. The program will be developed in collaboration with renowned American institutions to transfer new research techniques focused on Pakistani needs.
The CDWP approved the Balochistan Human Capital Investment Project at a cost of 5.6 billion. It approved the Jalozai Campus of UET Peshawar at a cost of 6 billion rupees.
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