Ishaq Dar’s Euro Bonds termed irregular by audit department

ISLAMABAD: Earlier in 2014 former finance minister Ishaq Dar had raised Rs280 billion through Euro Bonds, however in a recent audit report 2018-19 of the audit department, the issuance of these bonds has been declared irregular, sources informed Profit on Sunday.

Official documents state that the Government of Pakistan had launched $1 billion 10-year Euro Bond at a rate of 8.25 per cent interest per annum and $1 billion 5-year Euro Bond was launched at a rate of 7.25 per cent with the approval of the then prime minister Nawaz Sharif in April 2014.

The audit observed that the bonds were issued without the approval of the Cabinet in violation of Rule 16 (d) of Rules of Business.

According to the Rules of Business 1973, Rule 16 (d) among the cases to be brought before the Cabinet include proposals for levy, abolition, remission, alteration or regulation of any tax and floatation of loans, documents stated.

In addition to this, the audit department pointed out that the Bonds were issued at the highest rate of interest as compared to similar economies such as Srilanka, which raised $1 billion on 5.875 per cent, Mongolia $500 million on 5.125 per cent, Nigeria $500 million on 6.375 per cent, Zambia $750 million on 5.375 per cent, Vietnam $1 billion on 6.750 per cent and Mozambique had floated $500 million on 6.305 per cent interest rate.

The audit report is of the view that issuance of Euro Bonds without the approval of the Cabinet and issuance at a higher rate was irregular and unauthorized and has consequently resulted in extra financial burden on the national exchequer.

The audit report also states that the issuing authority and the management of the finance division did not reply till the finalisation of the report and that the audit department is still awaiting a reply to clarify the matter.

The audit report has since recommended that the loss occurred to the national exchequer due to exorbitant interest rates should be adjusted and the people responsible should be held accountable.

It is pertinent to mention here that former finance minister Ishaq Dar was running the affairs of the finance ministry at that time and interestingly the audit department has now highlighted this matter, years after his departure from the position of finance minister.

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Shahzad Paracha
The writer is a member of Pakistan Today's Islamabad bureau. He can be reached at [email protected]
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