Turns out cash-strapped Pakistan government will use coronavirus aid to pay bills

The cash-strapped Pakistan government, a few days ago, planned to seek USD 2 billion in new foreign loans from the global financial bodies to respond to the coronavirus crisis.

The loans that Pakistan sought to obtain from the World Bank and the Asian Development Bank (ADB) were higher than the USD 1.8-billion debt relief that Islamabad has sought from the G20 nations, The Express Tribune reported.

This was also aimed at undertaking fiscal reforms amid the rapid deterioration of public debt indicators.

The money, Pakistan had claimed, will be utilised by the finance ministry, State Bank of Pakistan (SBP), Securities and Exchange Commission of Pakistan and Federal Board of Revenue to strengthen market stability, market facilitation, supply measures and demand measures, according to the documents.

But as it turns out, Pakistan is using coronavirus relief aid to pay electricity bills.

No kidding here.

The Imran Khan government is diverting 10 billion Pakistani Rupees to pay interests of loans that were taken to retire circular debt to reduce electricity tariffs.
 
The decision was taken at a meeting of the economic coordination committee of the Pakistan cabinet.

This meeting was chaired by Abdul Hafeez Shaikh, the financial advisor to Imran Khan.

Shaikh has also appointed a policy committee for Pakistan's relief fund, and this committee will decide how the fund will be spent.

And allocating the said amount to reduce electricity tariffs was its first decision.

The investments in Chinese projects are sucking the Pakistan economy dry -- making the country forget about its priorities a little.

Pakistan's public debt is projected to increase to Rs 37.5 trillion or a whopping 90 per cent of gross domestic product (GDP) by June this year.

Pakistan also wants to take USD 300 million in loan from the ADB in the name of financial markets development programme.