PIAF warns govt of reliance on expansive commercial borrowing

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Lahore:      As the government’s reliance on expansive foreign funding continued to rise, the Pakistan Industrial & Traders Association Front (PIAF) has called for generating cheap funding, which has dropped significantly.
PIAF chairman Mian Nauman Kabir said that Pakistan’s external debt was primarily increasing because of the government’s inability to enhance exports and attract foreign direct investment. Asking the economic managers to review their irresponsible borrowing behaviour, he said the government has added more than $10.82 billion foreign loans in public debt on high interest only in one year.
Quoting the latest statistics issued by the central bank, PIAF chairman said that the reliance on commercial banks continued during the new government, which is more expansive, as without passing through due diligence process the Ministry of Finance borrowed over $4 billion through foreign commercial banks on short-term basis.
The short-term commercial borrowing was usually obtained at higher rates and without undertaking any due diligence in shape of seeking approval of the cabinet or the Economic Coordination Committee.
The PIAF Chairman, who also served as the interim provincial minister, said that it’s a worrying indicator because government reliance on short-term commercial borrowing is increasing, which is expensive, while our capacity to draw foreign inflows from cheap mode of financing is decreasing with the passage of time.

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