ISLAMABAD: Financial irregularities amounting to Rs98.56 billion have been identified in the Economic Affairs Division for the financial year 2023-24, mainly due to the non-recovery of long-outstanding foreign loans.
The Auditor General has urged the government to pursue these un-recovered foreign loans at the highest diplomatic and political levels.
According to Audit Report 2024-2025, one of the most significant cases involves the non-recovery of re-lent loans from a cement plant valued at €67.646 million, approximately Rs20.57 billion.
The loan, originally taken in 1994 from a French bank for setting up a cement plant in Hub, Balochistan, was guaranteed by a Pakistani bank. Following defaults, the Government of Pakistan assumed the debt under a 2001 Paris Club agreement.
Despite multiple interventions by the Economic Coordination Committee (ECC), proposals for asset sales, and legal consultations, the amount remains un-recovered. The audit notes that the prolonged delays and lack of enforcement have caused a direct loss to the public exchequer.
The audit also reports non-recovery of foreign loans worth US$ 304.50 million, around Rs85.26 billion, provided to countries including Sri Lanka, Bangladesh, Iraq, Sudan, and Guinea Bissau during the 1980s and 1990s under various export credit agreements. Despite earlier Public Accounts Committee directives and diplomatic follow-ups through the Ministry of Foreign Affairs, the loans remain unpaid. The report warns that these defaults not only represent a major financial loss but also contribute to Pakistan’s foreign exchange burden.
The report further cites other cases of non-production of records, unauthorised and irregular expenditures, and weak monitoring of foreign-assisted projects.
The Auditor General has recommended fixing responsibility for the losses, initiating legal proceedings where necessary, and overhauling financial oversight mechanisms within the EAD.
The audit also urges the government to take up un-recovered foreign loans at the highest diplomatic and political levels, enforce guarantees and repayment schedules for domestic re-lent loans, strengthen internal controls and debt management systems, and conduct regular valuations and reviews of debtor companies’ assets to avoid undervaluation losses.
Copyright Business Recorder, 2025
