ISLAMABAD: The advisor to the Prime Minister of Finance, Dr. Abdul Hafeez Sheikh, has said that blaming the current government for a phenomenal increase in public debt is unfair because it is also paying the loans obtained by previous governments.
Speaking to the media after tackling on Thursday the "First Forum of Capital Market Regulators of the Regional Economic Cooperation of Central Asia (CAREC)" on Thursday, Dr. Sheikh said Pakistan was going through a transformation since the current government had inherited a huge debt burden.
“Consequently, there is an increase in debt service and it will be unfair to blame the current government for adding more debt. It is necessary to take into account the fact that of the total revenue collection of Rs3.8 billion in the last fiscal year, around Rs2.3tr was transferred to the provinces, while Rs2.1tr was for debt service " , he said, adding that the government had to take loans to administer the government, for defense and development projects.
"For the current fiscal year, we have allocated Rs2.9tr for debt service and even loans taken by previous governments must be owned by the current government," he added.
When addressing a forum, the PM adviser says that capital markets can play a key role in economic growth
Before addressing the forum, Dr. Sheikh said that capital markets could play a key role in financing economic growth by facilitating trade and investment flows. "As economies develop and investment projects become larger and more complex, the development of capital markets facilitates the efficient allocation of resources and the distribution of risks," he added.
The prime minister's adviser said the government believed in transparency and that the capital market was important for the development of the private sector, while transparency in the capital market could be further increased with improved regulations. "The economic recovery is not an easy task since revenues are declining and, despite some improvements, much remains to be done," he added.
The forum was jointly organized by the Pakistan Securities and Exchange Commission (SECP), the Asian Development Bank (ADB), the Central Depositary of Pakistan and the National Clearing Company of Pakistan Limited to discuss ways to improve capital markets by improving access to financing, supporting the development of the private sector, stimulating economic activities and strengthening regional cooperation and integration.
Speakers stressed that the financial sector in most CAREC countries had been dominated by traditional financial institutions such as banks.
Capital markets in the region are also lagging behind, with some CAREC members with a low market capitalization rating, according to the 2018 Global Competitiveness Report.
The CAREC Program is an association of 11 countries (Afghanistan, Azerbaijan, China, Georgia, Kazakhstan, Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan and Uzbekistan) to promote economic growth and development through regional cooperation.
ADB Vice President Shixin Chen said the forum underlined the need to build strong and meaningful cooperation between capital markets of CAREC members. "The region needs much more financing and investments than public sector resources can provide on their own," he said, adding: "The mobilization of private sector funds, including through capital markets and institutional resources. in the long term, it is fundamental to satisfy the financing gaps for the development of the CAREC Region. "
SECP President Amir Khan said in his welcome speech that the forum was the first step in developing a solid network of capital market regulators in the CAREC region by providing a way for capital market regulators exchange ideas and share best practices, in addition to promoting an inclusive agenda of reforms to attract private capital for development and growth throughout the region.
“We have all witnessed how improved regional integration can work for the benefit of those who collaborate; It's time to work together to create synergies and pool resources to achieve shared success, ”he added.
Khan emphasized the need for integration as an engine for growth, adopting technology as a facilitator, linking capital markets with the real economy and reducing regulatory barriers.
The forum included panel sessions and open discussions that covered country case studies, as well as specific topics such as lessons on capital market integration, derivative market development, and the regulatory and regional implications of financial technology.
Representatives of the ministries of finance, central banks, capital market oversight agencies of all CAREC countries and relevant industry professionals participated as panelists in several sessions to share and discuss international best practices with the participants.
Since its inception in 2001, the CAREC Program has invested heavily in improving regional connectivity, promoting energy trade and facilitating regional trade. In 2017, the 11 countries adopted a new long-term strategy, CAREC 2030, to expand the objective of the program to strengthen economic and financial stability, including by promoting cooperation between capital markets and strengthening the investment climate in Central Asia.
Posted on Dawn, August 30, 2019
Source: https://www.dawn.com/news/1502513/present-govt-should-not-be-blamed-for-debt-spike-hafeez
