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Loans and goals

The loan commission formed to investigate the use of foreign loans in the last ten years is being seen as a tool to target opponents rather than give the nation a way forward

Loans and goals

Prime Minister Imran Khan’s loan commission starts functioning amid doubts that something positive will come out of it — that there will be concrete evidence, not just maligning political opponents.

“Pressure on economy is relieved. Now I will go after the ‘thieves’ who have left the country under huge debt,” PM Khan told the nation on June 11 in a late night address after his government presented its first budget and high court cancelled bail of former president and top opposition leader Asif Ali Zardari the same day. Zardari is facing charges of money laundering and is being interrogated by National Accountability Bureau. The PM, in his address, announced to make a high-powered inquiry commission to look into how the former rulers brought the debt to Rs24,000 billion in the past 10 years (2008-2018).

On June 20, federal government announced the Terms of References (ToR) of this inquiry commission, asking to submit an interim progress report every month, and a final report within six months. The time period “may, however, be extended with the prior approval of the prime minister,” the notification reads.

Newly appointed Deputy Chairman of NAB, Hussain Asghar is leading this commission which comprises 12 officials who are from NAB, Federal Investigation Agency, Intelligence Bureau, State Bank of Pakistan, Inter-Services Intelligence, Securities and Exchange Commission of Pakistan, Federal Board of Revenue, representative of Accountant General Pakistan Revenues, representative of Military Intelligence and special secretary from Finance Division as its secretary. The commission is further empowered to engage any person from the public and private sector, locally or abroad as a member, consultant or adviser, for assistance.

However, economists and senior journalists observe that the target of the PTI government is not to find loopholes in the spending of the foreign loans but political victimisation. They believe if the government is serious it should start from 1980s when Pakistan’s internal and external loans started accumulating. They question inclusion of representatives of crime investigation agencies and security agencies in such a commission rather than nominating economic experts and auditors in the commission. They believe it’s a kind of Joint Investigation Team (JIT) against political opponents.

“If the government seriously wants to know how Pakistan started incurring debt, it has to start from 1980s when Pakistan’s external and internal debt started accumulating,” Dr Bengali suggests.

The commission, as per ToRs, aims to determine the significance of major infrastructure or public sector development projects undertaken from 2008 to 2018; investigate the process of awarding or implementation of contracts of development projects and loans borrowed to complete them.

“If a loan was borrowed, the commission will investigate where the money was spent; it will investigate if the terms and conditions of a public contract were tainted or benevolent or artificially inflated to facilitate any kick-backs; it will probe if any public office holders or their relatives used public funds for personal expenditures beyond what is permitted under law and fix responsibility and refer ‘any irregularity or illegality’ that is uncovered during the probe to relevant departments for investigation,” the ToRs further read.

“The objective of a committee always matters. In this situation the time frame to examine the loans’ consumption and the composition of the commission shows that the objective is nothing but witch-hunting,” says Karachi based economist, Dr. Kaiser Bengali.

“This is a commission that has purely political objective. The purpose of the commission is not to investigate but punish,” he says, adding, “I believe nothing will come out of this commission except wasting some more time and money on its meetings.”

Special Assistant to PM Nadeem Afzal Chan, says. “The commission will dig out reasons behind wastage of foreign loans in the country. We just want to see why the economy could not grow though huge loans were acquired in the past 20 years. Is there any misuse of these loans that led to this situation?”

PM Khan in his June 11 address to nation says the debt before 2008 was Rs6,000 billion that went up to Rs30,000 billion in the last one decade, PM said the commission will examine where this money ended up and how much was spent on projects.

PM Khan’s quest to look into the past debt is not new. He is consistently following his political opponents. Earlier, in October 2018, while chairing a cabinet meeting, he had instructed the finance ministry to conduct an analysis of how Pakistan’s debt increased in the past 10 years. In September last year, chairing a Punjab cabinet meeting, Khan said the general public should be informed regarding the loans acquired by the previous governments and every detail of the past 10-year governance.

Pakistan’s foreign debt and liabilities were up to Rs6,000 billion till 2008 which went up to Rs14,000 billion till 2013 while PPP was in power. The debt shot to Rs24,000 billion in 2017 and if liabilities are included it comes up to Rs29,000 billion, according to the finance ministry figures.

Interestingly, the PTI government itself has acquired $9.5 billion in the past nine months in the form of easy loans from international creditors to repay previous loans. It also signed a $6bn deal with the International Monetary Fund and aims to get some money on low interest rate from the World Bank and Asian Development Bank (ADB), says PM’s Advisor on Finance Abdul Hafeez Shaikh.

The commission to examine the (mis)use of foreign loans held its first meeting last week. Its head Hussain Asghar announced that the commission will minutely look into foreign travels, construction of roads and renovations of certain rulers’ houses to check whether there was any misuse of funds.

“If the government seriously wants to know how Pakistan started incurring debt, it has to start from 1980s when Pakistan’s external and internal debt started accumulating,” Dr Bengali suggests. Further, there is need to know the impact of the change in foreign funding from project to programme loans. They have to see the growth of five major heads of expenditures — civil government, defence, debt servicing, subsidies, and development expenditure, he adds.

The government has also to see monetary expansion/money supply growth, he says. It is important to mention that for the past several years Pakistan is getting loans for programmes rather than projects. “In programme loans it is difficult to hold this type of audit because these loans are used to strengthen economy and are not focused on particular project(s),” he says.

Waqar Gillani

waqar gillani
The author is a staff reporter. He can be reached at [email protected]

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