Public debt swells by Rs373.5bn, foreign reserves dwindle by Rs2.1bn; inflation jumps to 19.2 pc
By Khalid Mustafa
ISLAMABAD: In the first 100 days of the coalition government, Pakistan’s economy nose-dived with massive fall in foreign reserves by $2.1 billion (15.8 per cent), huge downgrading of rupee by Rs8.3 against US dollar, which is deprecating currency in the world at the moment.
Owing to the enormous meltdown of rupee during the first 100 days of the new government, the public debt of the country has swelled by Rs373.5 billion, meaning that country’s debt has increased by Rs3.70 billion per day. These shocking disclosures based on hard facts were gathered after deep investigation by The News.
The external debt of the country stood at $45 billion on March 31, 2008, but rupee during March 31- July 7 of current year period depreciated by 11.7 per cent, which caused the massive increase in public debt by Rs373.5 billion.
According to the top official at Ministry of Finance, with depreciation of Pakistan currency by one rupee the public debt increases by Rs45 billion. Since the Pak currency melted down by Rs8.30 against one US dollar during the time under review, so the country would have to face extra financial burden of Rs373.5 billion in its debt regime.
The market capitalisation situation has also massively deteriorated during the said period showing that the country received financial jerk of Rs933 billion. The market capitalisation was at Rs4,623 billion by March 31, 2008, but it went down by Rs3,690 billion revealing that the country received a financial setback of Rs933 billion ($20.7 billion).
The stock exchange also went down by 3,248 points (21.5%), which stood at 15,126 points by March 31, but shed to 11,878 points just because of the non-availability of required political stability which guarantees economic activities in the country.
Food inflation has also massively increased up to 19.7 per cent, which was 14.1 per cent before the installation of the coalition government. In spite of many attempts The News failed to make contacts with Finance Minister Naveed Qamar and Secretary Finance Furrukh Qayyum to know their side of the story, as both the top men of the ministry did not respond to the calls of this correspondent.
However, the fast deteriorating economic indicators show that the economy is not on the radar screen of the government. This is quite evident from the fact that there is no resolve in corridors of power to provide stable, cohesive political environment to handle the current economic challenges the country is facing. Furthermore, there is total lack of desire from political leadership of coalition parties enjoying power in the country to face the challenges.
The News, 8/7/2008