ISLAMABAD, Aug 19: The Musharraf regime has broken all records of borrowing and is pushing the country into a debt trap, according to Ahsan Iqbal, information secretary of the Pakistan Muslim League-Nawaz.

“It borrowed … more than $15 billion during the past four years and according to the latest data released by the State Bank, the country’s total debts and liabilities have peaked to an all-time high of $40 billion mark,” Mr Iqbal told newsmen here on Sunday.

In 2003-04, the total external debt amounted to $33.352 billion. If the government had really stopped borrowing, as it kept on claiming having broken the ‘debt bowl’, the country’s total debt would have declined to $23.646 billion after payment of principal as debt servicing at the end of June 2007.

He said: “The Musharaf regime benefited from the highest foreign exchange inflow in the country’s history because of the post-9/11 scenario. Over $65 billion was injected into Pakistan economy, including more than $25 billion coming through overseas Pakistanis’ remittance and $10 billion in US assistance.

But, he said, the government squandered the opportunity because of its elitist economic policies. The country’s exports did not meet the rising trend of imports, resulting in an all-time high trade deficit, he said, adding that Pakistan borrowed more than $3 billion during 2006-07 alone. Official figures showed that the money was borrowed to pay debt-servicing liabilities and reduce the current account deficit, he said.

“State Bank’s figures show that Pakistan paid $13.258 billion as debt-servicing, including $3.553 billion as interest during the past four years”.

He said: “The government policies are pushing the country towards a serious crisis. The cost of borrowing could pose a threat to national economy after the average annual payment of debt-servicing reached $3.314 billion. The State Bank has been purchasing billions of dollars from local market by flooding local currency, fuelling inflation.”

The current account deficit for the year ended on June 30, 2007,

increased by 41 per cent to $7.016 billion.

He said that instead of focusing on increasing exports, the government has been relying on “not very dependable sources, like foreign direct investment, remittance by overseas Pakistanis and privatisation proceeds to bridge the gap”.

“Despite record inflow of FDI (an increase of 87 per cent to $8.42 billion) and remittance of about $6.5 billion in 2006-07, the government borrowed $3.044 billion. The outflow of foreign exchange in the form of profits and dividends has sharply increased by 60 per cent reaching close to $1 billion during the last fiscal year.”

He accused the government of neglecting education and health sectors besides heavily relying on “services sector, real estate, and stock market, ignoring real productive sectors of the economy – industry and agriculture. It did not upgrade the infrastructure as a result the country is facing a serious energy crisis”.