Pakistan forms Commission to probe external debt
The government of Pakistan on Friday (June 21) appointed an 11-member Commission of Inquiry to determine if increase in external debt between 2008 and 2018 was justified by infrastructure development program or misused by public office-holders of the last two governments of the Pakistan Peoples’ Party and the Pakistan Muslim League-Nawaz.
Headed by Deputy Chairman of the National Accountability Bureau (NAB) Hussain Asghar, the commission comprises the representatives of the Military intelligence, Inter-Services Intelligence, Intelligence Bureau, Federal Investigation Agency, NAB, State Bank of Pakistan, Federal Board of Revenue, Securities and Exchange Commission of Pakistan, Accountant General Pakistan Revenue and special secretary of finance division.
The commission shall furnish its final report within six months of its formation, with periodical interim reports on a monthly basis. The time limit may, however, be extended with prior approval of Prime Minister Imran Khan.
Under its terms of reference (ToR), the commission will determine significance of major infrastructure or public sector development works carried out from 2008 to 2018, and commensurate them with the increase in public debt from Rs 6,690 billion in 2008 to Rs 30,846bn till Sept 2018.
The commission will also investigate about the award or implementation of any contract, agreement or project and whether any debt was taken for a particular project or undertaking and the same was then spent on that project or not.
It will also conclude if the terms and conditions of any public contract were tainted, benevolent or artificially inflated to facilitate any kick-backs and, if so, in whose favour.
It will also ascertain whether any holders of public office or their spouses, children and any person connected to them expended any public funds to meet personal or private expenditures, beyond what is permitted under the law and rules.
Interestingly, the commission will also investigate if “the cap prescribed under the Fiscal Responsibility and Debt Limitation Act, 2005 has been busted” and if so, reasons and justifications thereof. It may be noted that all successive governments since fiscal year 2007-08 have been in breach of this law and reporting its reasons to the parliament every year.
The commission will also examine if the amendments to the 2005 act were made with the spirit of Article 166 of the Constitution or not.
In his address to the nation on June 11, Prime Minister Imran Khan had announced to form a high-powered inquiry commission to probe into loans acquired in the last 10 years (2008-2018). He said that the country’s debt rose to Rs 97,000 billion in the past 10 years, and accused the opposition parties of destabilizing the country.
The prime minister put the blame for economic difficulties of the country on former governments of Pakistan People’s Party (PPP) led by the former President Asif Ali Zardari and Pakistan Muslim League-Nawaz (PML-N) led by Mohammad Nawaz Sharif .
He explained how the two former governments had been involved in corruption and burdened the country with huge foreign loans.
The prime minister said the two political parties entered into an alliance and kept bringing a chairman of National Accountability Bureau (NAB) of their own choice.
Tellingly the former Prime Minister Mohammad Nawaz Sharif is in prison for graft and former President Asif Ali Zardari is in the custody of the National Accountability Bureau in mega money laundering cases.
Former prime minister Nawaz Sharif’s government obtained a whopping $35 billion in new loans during his four-year tenure. From July 2013 to June 2017, Pakistan’s total external debt grew by 30% to $79.2 billion, according to an International Monetary Fund (IMF) report.
In July 2017, The Supreme Court of Pakistan disqualified Nawaz on concealment of assets charges. Former finance minister Ishaq Dar would also have to face a reference in the accountability court over charges of a 91-time increase in his assets, which did not match his known sources of incomes.
According to the finance ministry Pakistan’s total debt and external liabilities was $20.90 billion in 1990, rising to $38.86 billion in 2007 and $99.1 billion now.
Bolivia & Ecuador
Pakistan’s commission to probe into external debt misuse is not unique.
In January 2010, Bolivia followed in Ecuador’s footsteps as the second country to commission an audit of their external debt. The Bolivian Parliament approved the commission to investigate the history of the country’s debts – where the loans came from, how, and by whom.
The Bolivian legislation specified that the audit should determine the “legitimacy, lawfulness, transparency, quality, effectiveness and efficiency” of debt processes and debt cancellation processes registered in Bolivia in recent decades.
Indebtedness levels “continue to be alarming” in spite of debt cancellations. Furthermore, it was stated that economic and social development projects and programs funded with external resources have failed “to reduce the high levels of poverty and inequality” in the country.
In July 2007, the Ecuadorian Ministry of Economy and Finance launched the world's first debt audit commission.
Other countries which probed external loans include Argentina, Greece and Philippines.