By: Dr Ali Akbar Dhakan
DEBT AND CONTINGENT LIABILITY MANAGEMENT
Under Constitutional Article 167, provincial Government can borrow with in certain limits prescribed by the Provincial Assemble. Government of Sindh has been borrowing foreign loans with the consent of the Federal Government from time to time.
Effective Debt Management is integral part of the sound expenditure management and contribute to the creation of fiscal space, which can be exploited for diverting resources to the development portfolio and for improving public services. According expensive cash development loans (CDLS) were prematurely retired through less costly foreign loans from the World Bank (WB) and Asian Development Bank (ADB).
They comprise of the Federal Loans including three major categories:
Foreign exchange loans.
Rupee Loans or cash development loans (CDLS).
Counter parts fund rupee loans.
(a) Foreign exchange loans.
They are Federal Government loans and guaranteed loans which are taken by autonomous organizations under the guarantee of the federal Government.
(b) The rupee loans (or domestic loans)
The federal government extended this category of loans from 1972 to 2000 in the form of CDLS for financing there developments budgets the existing domestic debt of the province are normal CDLS and SCARP CDLS for installation of tube – wells under salinity control and reclamation project extended by WAPDA. They are payable in 25 years with 05 years pace period which now has been discontinued so ADPS are financed by the provincial government.
( c ) the counterpart fund rupee loan.
Are incurred by the province getting market loans which are borrowed during 1990 and now all retired in 2003-2004.
DEBT LIABILITY OF THE PROVINCE
They increase from Rs. 70 million in 1973-74 to Rs, 71, 425 million 2005-06 Recently Government of Sindh Has been negotiating foreign loan debit liability of 1944 million US dollars for (1) Sindh coastal and inland community Dev. Project with ADB (2) Sindh water sector improvement with IDA. ( 3) First Sindh education sector development policy credit with IDA (4) Sindh cities improvement programme ADB (5) Karachi mega city development projects with ADB and (6) Sindh rural road construction phase 2 project with JBIC (ODA LOAN).
DOMESTIC DEBT LIABILITY
It was of Rs 24, 650 million upto 30.5.07
(c) CONTINGENT LIABILITY
It is general provident fund and pension fund. GPF increased from Rs 12 million in 1971-72 to Rs 32,956 million in 2006-07 where as the Pension payment increased from Rs 4,984 million in 2002-03 to Rs 10,888 million in 2007-08. Thus total Debt Liability stood has foreign loans Rs 68,572 million CDL Rs 24,650 million and Accumulated GPF Liability Rs 126,178 million totaling Ts 126,178 million.
The provincial government is making payments to the federal government against interest and principal amounts of CDLS as well as foreign loans on monthly basis to the Federal Government through source deductions. It stood Rs 12,155 million in 2007-08 as principal and Rs 9,972 million as interest.
MARK UP ON OVER DRAFT
Financial Position of Sindh Government remained extremely fragile during the year from 1991-92 to 2002-03 when the Province had to resort to State Bank’s Overdraft to meet its budgetary deficits, the State Bank has fixed Rs. 2,150 million as the ways and means limit for government of Sindh. The OD stood at Rs 21,197 million in 2006-07.
FISCAL AND FINANCIAL MANAGEMENT REFORM AGENDA
The government of Sindh has adopted two pronged reform strategy:
(a) Premature Debt Retirement
In this way, the government saved Rs 15.9 million on account of interest payment which should have been paid if such loans had to be retired in their normal course.
(b) Creation of investment funds:
The funds created to cater for the contingent liabilities and to meet our social responsibilities are:
Sindh General Provident investment fund (SGPIF).
Sindh Pension Fund (SPF)
Sindh Social Relief Fund (SSRF)
(a) in 2007-08, it was created with the seed money of Rs, 2,000 million and will be repeated every year so as to overcome GPF liabilities in next 10-15 years.
(b) Sindh Pension Fund was establish in 2003 to meet ever increasing pension liabilities of the retired govt. servants. It was created with the seed money of Rs, 1,200 million is likely to grow to Rs 13 billon by june 2008.
(c ) Sindh Social Relief Fund (SSRF)
It was establish in 2005 with the seed money of Rs 3,000 million and will grow to Rs, 10 billion with the interest earned on its deposits. The management of the fund and investment decisions are taken by a high powered committee presided over by the Chief Secretary Sindh which includes additional Chief Secretary P and D Depatt. Secretary Zakat and Ushr, Secretary Finance and two representatives of the Private Sector. The main objective of moving towards some form of direct intervention in providing relief to the vulnerable and disadvantaged people of the province but it is very sorry to note that this fund has not still been utilized for the purpose of providing economic relief to the needy poor people of Sindh.
By: Dr Ali Akbar Dhakan
1.To be ingratitude is like an animal,
Human beings cannot have ingratitude moral.
2.Ingratitude will never flourish and be advanced,
In any wordly and heavenly scheme well planned.
3.Man and woman are two wheels of a cart,
With grace of God they became one parcel and part.
4.I am not ingratitude to all who helped me,
During my early years of career which perplexed me.
5.I always pray for the souls of my sympathizers,
Who are Mr. Ali Haider Depar others are my teachers.
6.May God rest their soul in heaven and paradise,
They may get the reward of their deeds with all surprise.
7.What is the price of being ingratitude,
He will surely suffer all hardships for his such attitude.
8.If you need mercy of God, be thankful to all,
Who made you human being and above all.
9.The world is running on the principle of give and take,
You should do good deeds and leave the false and fake.
10.Now be good and do good with all,
This is the guidance from Benevolent Call.
11.Akbar remains in the habit of loving needy people,
May God give us strength and power to serve poor people