The World Bank has suggested a new plan to help Pakistan manage its rising debt. They recommend creating a permanent Debt and Risk Management Committee (DRMC) to keep track of loans and ensure the country doesn’t take on too much financial risk. This committee would be accountable to the country’s Parliament, making sure all borrowing decisions are clear and responsible.
Pakistan’s debt has become a big problem, and the World Bank has pointed this out several times. The DRMC would help make sure that any new loans fit with Pakistan’s financial goals, keeping the country’s borrowing manageable and sustainable.
Right now, different government departments handle debt separately, which can cause confusion and lead to bad decisions. For example, loans from organizations like the IMF or countries like China are recorded in different ways, making it hard to understand the full picture of Pakistan’s debt. The DRMC would bring everything together in one place to avoid these issues.
This need for better debt management was discussed in a recent meeting supported by the UK. Officials admitted that key government departments, such as finance, planning, and economic affairs, often don’t coordinate well with each other. The DRMC would fix this by working across these departments and making sure all borrowing decisions are carefully planned.
One example of poor debt management happened when the finance ministry nearly took a loan that would have been very expensive for Pakistan. After concerns were raised, the plan was canceled. This shows how important it is to have a committee like the DRMC to oversee borrowing decisions and make sure they’re safe for the country.
The World Bank is also about to approve a new 10-year Country Partnership Programme for Pakistan, which will bring in $20 billion in funding. The goal of this programme is to help Pakistan reduce financial risks and improve investor confidence. By having better debt management, Pakistan can avoid future financial problems.
The DRMC would take on many important tasks. It would assess risks linked to loan guarantees, help create borrowing plans, and ensure that debt records are clear and accurate. The committee would also help make sure that borrowing decisions are made carefully, using good data and reports.
The DRMC would include representatives from key government bodies like the Finance Division, the Economic Affairs Division, and the State Bank of Pakistan. It would meet regularly to review Pakistan’s debt and respond quickly if economic conditions change. The committee’s effectiveness would be reviewed every few years to make sure it is working well.
Pakistan’s public debt has grown to over Rs71 trillion, which is 67% of the country’s economy. This shows how important it is to have better debt management. The World Bank’s proposal offers a clear plan to reduce financial risks, improve coordination, and make borrowing safer for the future.
Although the proposal is still being reviewed, the finance minister has shown support for putting it into action quickly. If approved, the DRMC could help Pakistan gain control over its debt and build a more stable financial future.
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