Friday 24 September 2010

Rs50 bn loans written off

Pakistani banks have yet again quietly written off Rs50 billion fresh loans outstanding against their borrowers during the last two years and at the same time, Pakistan’s total borrowing from World Bank (WB), Asian Development Bank (ADB) and International Monetary Fund (IMF) reached to $31billion.It has been revealed that Islamabad was now paying $3.6 billion interest alone each year on these foreign loans. Finance Minister Dr Abdul Hafeez Sheikh shared the mind-boggling figure of loan written off by the Pakistani banks in the National Assembly during the question hour. In the same session, Minister of State for Economic Affairs Division Hina Rabbani Khar, however, made revelations about the total foreign loans of three lending agencies followed by annual payment of interest by the Government of Pakistan.
These two figures about the loans — one written off and other obtained from the international lending agencies — were presented in the National Assembly during the question hour by Hina Rabbani Khar.These facts tell a sorry state of affairs as how on the one hand the country was massively borrowing from the international institutions to meet its own financial gaps and on the other how their own banks were busy in writing off the massive amounts running into billions.
The Supreme Court is also seized with loan write off case of 2007 when it was reported in the media on the basis of Auditor General’s report that Pakistani banks had written off Rs60 billion. Chief Justice Iftikhar Muhammad Chaudhry had taken a suo moto notice of this story. The Supreme Court is yet to take any decision on this case since 2007 and banks continued to write off loans. One official said, “we had to differentiate between the genuine written off loans and those who were using their clouts to get those principal and marks up written off every year.”Meanwhile, in a reply to a question by Sheikh Salahuddin, the finance minister said a sum of Rs50.854 billion was written off by the banks during the last two years. Replying to another question of MNA Raja Asad, Hina Rabbani revealed that the country had borrowed $31billion till June 30, 2010 from WB, ADB and IMF and was paying $3.6 billion as interest each year. Giving the break up of loans, she said world had given $11.4 billion loan and was being paid $1.6 billion every year as interest on these loans. Pakistan took $11.58 billion from ADB and was paying $1.4 billion as interest on annual basis. $8billion have been borrowed from IMF and $445 million per year are being paid to them as interest.

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