Karachi: ‘Audit is being conducted without notice, to put it simply, is prevalent Chanel in Pakistan.’ According to Chanel, financing available to producer will decrease if interest rates are raised. Market’s pricing for purchases will undoubtedly rise if supply is reduced. Petroleum prices are one of highest in Pakistan”, said Dr. Atiq ur Rehman Associate Professor Kashmir Institute of Economics.

Expressing his views on 15th interactive series of ZU Dialogues, titled ‘Policy rate and ballooning debt servicing cost’ via zoom meeting conducted by Ziauddin University. Giving presentation he continued showing budget card and explained, “Entire spending of domestic and foreign debt is $ 8,708,540.

There are other countries taking action besides Pakistan. Japan, US and other countries all took on debt; Japan’s GDP is about 250 percent more than United States, while US has 150 percent more debt than most other countries combined. We use 40 percent of budget despite having a debt of about 75 percent”.

“Domestic debt was Rs 16,400 billion at time of previous administration’s last budget in April 2018 and government set aside Rs 1,391 billion for markup on it. When new administration created its first budget in April 2019, domestic debt had climbed by 14.2 percent, which should have resulted in corresponding increase in markup, instead, markup jumped by 82 percent because on April 19, policy rate has risen from 5.75 percent to 12.25 percent, causing a sharp rise in markup payments. An endemic caused markup to drop from 9 percent in April to 7 percent in June following year. Therefore, he said, a 25 percent increase in depth only resulted in a 4 percent increase in markup”, Dr. Atiq disclosed facts. He said that when a country has an economic crisis government’s fiscal and monetary policies loosen.

Seeing flood scenario, they should lower interest rates and demonstrate that they wish to assist general public. During dialogue session, Dr. Mirza Aqeel Baig Assistant Professor and HOD Economics IoBM said, “Since 1990s, loans have made our nation’s economy unprofitable, we are now in our fourth decade, yet issue has not been resolved. We are currently in this predicament as a result of their short-term solution, which was to obtain a loan to pay a debt”. “Our current budget shortfall is around Rs 4,000 billion. Startling statistic of 90 percent of spending going toward domestic debt indicates that Pakistan’s state bank has lost game of soaring international debt. State and the majority are losers, but there are also winners as a result of their acquisition of bonds and security that served as our source of interest rates. Class that purchases bonds and other government securities and profits from their interest, but state pays for it. From this, we learn something that if we stop implementing such measures and adopt a certain way of thinking, country’s economic problems would be sustained”, he continued explaining. In his concluding remarks, moderator of 15th ZU Dialogues Professor Dr. Irfan Hyder Vice-Chancellor Ziauddin University said that since cost of monetary policy is in billions, there needs to be a thorough report describing its success. He thanked panelists for joining dialogue session and sharing their valuable remarks.

Published in The Daily National Courier, October, 08 2022

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