With total internal and external debt liabilities of the country standing at Rs19,299.2 billion, or 66.4 percent of the country’s gross domestic product, financial market experts question the justification for the government to raise $2.5 billion in just one and a half year from international debt markets through 5- and 10-year dollar-denominated Eurobonds at rates 7.25 -8.25 percent.

Former finance minister and economist Dr. Salman Shah says the belief that the Eurobond sale was oversubscribed in world market is an absurd notion, as Pakistan’s yields are higher than those of Sri Lanka and Greece, an economy in depression. Can we really afford to borrow at 7.25-8.25pc, although Pakistan issued its 2007 Eurobonds at a premium of only 325 basis points above the US Treasury rates, he questioned.

The government issued the bonds in a hurry with no time to do proper marketing. Even the African countries sovereign bond rates are lower than Pakistan’s. The government should work on a sustainable way of building reserves and to focus on economic growth and come up with export boosting policies.

Trade imbalance, the biggest issue of the economy is still intact and filling reserves gap with Eurobonds and strengthening rupee through foreign exchange intervention will further worsen trade imbalances, said Asif Beg Mirza, a financial market expert .

Criticizing the government for its absolute dependence on borrowing in financial matter, he lamented that mind of our financial managers remain always busy in search of new avenues of borrowing and ways to burden common man under taxes. Noted economist Dr Ashfaq Hassan Khan said that Pakistan tapped the international debt market twice in just one year. In April 2014, Euro bonds worth $ 1 billion of 5 years tenor with mark-up of 7.24pc and $ 1 billion of 10 years tenor with mark up of 8.25pc were launched. In November 2014 again international Sukuk worth $ 1 billion with a tenor of 5 years at 6.75 mark-up were issued.

The total debt liabilities of the country stood at Rs19,299.2 billion. Every Pakistani now owes a debt of about Rs101,338. This figure was Rs90,772 in 2013. It was estimated at Rs80,894 in 2012 and was only Rs37,170 in early 2008.

LCCI’s former vice president Kashif Anwar observed that Pakistan is rich in resources. We have agricultural land with surplus crops of cotton, rice, wheat, fruits and many other things. The country is rich in livestock with 14pc and 7.5pc global population of buffaloes and goats, respectively.

“We claim to have one of the biggest reserves of coal deposits in Thar and in Baluchistan; we have gold and copper mines. The coastal area of Pakistan is blend with one of the best sea food items like a fish, Prawn, Lotester etc,” said Kashif Anwar.

He said that financial managers have to follow Bangladeshi model, which increased its exports with meager resource as compared to Pakistan. Finance Ministry’s thinking is myopic to the extent that they are striving to create foreign exchange of $20 billion.

Experts said that actually the government had budgeted $1 billion from Eurobond in the FY16 budget but had no intentions to go into an issue within first quarter. The government was expecting $1 billion by September from the ADB, World Bank and Japan; but due to failure of the local authorities to honor commitments about energy reforms the disbursements are delayed, urging the finance minister to approach the international bond market despite the fact that timing is not right as the objective is to pile up reserves one way or the other, irrespective of the repercussions in the medium to long term, stated former finance minister Dr. Salman Shah.

Institute for Social and Economic Justice’s ED Syed Abdul Khaliq stated that debt-to-gross domestic product (GDP) ratio stands at 66.4pc in which foreign debt is Rs6.4 trillion and domestic debt is Rs12 trillion.

The external debt servicing reached close to $7 billion in fiscal year 2014, which is almost 36pc of the reserves of the State Bank of Pakistan.

Ideally, this ratio should be less than 30pc to allocate more resources to social and poverty-related sectors. He said the debt situation was alarming and the government must review its reckless borrowing behaviour. The government must stop reckless international borrowing and minimise reliance on foreign debt in future. People must demand an audit of the public debt, and all new loan contracts should be subjected to a debate in parliament and its approval.

Noted economist Dr Qais Aslam said that eurobond was launched to pay off the previous debts and IMF loans. The bond was over-subscribed because it was expensive and government entered into a long term commitment for shorter term relief, which is illogical.

LCCI President Ijaz Mumtaz said that government has been exploring possibilities of financing its deficit from multiple sources like IMF, World Bank, domestic borrowing and now it has found the easiest, yet extremely expensive, solution of all, eurobonds.