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Public debt jumps to Rs11 trillion
Khalid Mustafa
Monday, May 23, 2011
ISLAMABAD: Pakistan’s public debt has increased to a mind numbing Rs11 trillion, marking a 129% increase over a mere 48-month time span. In June 2007, the public debt stood at a relatively low figure of Rs4.8 trillion.
The statistics speak volumes about the free spending ways of the incumbent political dispensation which has obviously found the easy way out of borrowing rather than cutting down its expenses and increasing the revenue base. Consequently, while the corrupt leaders become billionaires, every newborn baby in Pakistan in 2011 has a Rs60,000 debt awaiting him, reveal latest figures compiled by the Ministry of Finance and available with The News.
Meanwhile, according to State Bank of Pakistan (SBP), Pakistan’s external debt has swelled by 45 percent to $59 billion from $40 billion in 2007. And the run-away multi-trillion public debt does not stop here. The galloping public debt figure will surely turn out to be even higher by the time the economic survey is released before the budget in the first week of June.
According to the ministry mandarins, the exchange rate depreciation between 2007 and 2011 also had a “devastating impact” by causing a Rs1200 billion increase in debt. In percentage terms however, the foreign exchange depreciation factor, while being high, was nevertheless responsible for a 20% increase out of the total whopping 129%.
It is pertinent to point out that the Rs4.8 trillion public debt figure reflected the total public debt piled up since 1947 whereas another Rs6.2 trillion were added up by the incumbent government in just four years, exposing the sheer incompetence of the financial (mis)managers of the incumbent regime.
A senior finance ministry functionary pointed out that the Rupee: Dollar parity was 1:60 in 2007, and depreciated to 1:86 in 2011, adding Rs1.2 trillion to the public debt.
The economic managers of the incumbent regime have been relying on huge domestic borrowing to finance their budget deficits because of which the domestic debt has surged by 132 percent (Rs2.3 trillion) to Rs5.8 trillion in 2011 from Rs2.5 trillion in 2007.
With the country’s financial managers embracing the IMF programme, Pakistan’s debt misery has multiplied manifold. Pakistan has so far received a loan of $7.3 billion from IMF under its SBA programme of $11.3 billion but this loan is being used only to bolster foreign reserves and improve the balance of payment situation as it can neither be used for budgetary support nor be made a part of the development budget.
The official said that this massive debt has compromised the country’s sovereignty in the real essence of the word and the only honourable option was to widen the tax base and increase government revenues. The country’s current tax to GDP ratio has further declined to 8.8 percent, the lowest in the region. “With this tax to GDP ratio, no nation can ever break out of a crippling debt trap. Its time to either pay taxes, or pay the price of sovereignty,” said the official.
http://www.thenews.com.pk/TodaysPrin...ID=6182&Cat=13
Khalid Mustafa
Monday, May 23, 2011
ISLAMABAD: Pakistan’s public debt has increased to a mind numbing Rs11 trillion, marking a 129% increase over a mere 48-month time span. In June 2007, the public debt stood at a relatively low figure of Rs4.8 trillion.
The statistics speak volumes about the free spending ways of the incumbent political dispensation which has obviously found the easy way out of borrowing rather than cutting down its expenses and increasing the revenue base. Consequently, while the corrupt leaders become billionaires, every newborn baby in Pakistan in 2011 has a Rs60,000 debt awaiting him, reveal latest figures compiled by the Ministry of Finance and available with The News.
Meanwhile, according to State Bank of Pakistan (SBP), Pakistan’s external debt has swelled by 45 percent to $59 billion from $40 billion in 2007. And the run-away multi-trillion public debt does not stop here. The galloping public debt figure will surely turn out to be even higher by the time the economic survey is released before the budget in the first week of June.
According to the ministry mandarins, the exchange rate depreciation between 2007 and 2011 also had a “devastating impact” by causing a Rs1200 billion increase in debt. In percentage terms however, the foreign exchange depreciation factor, while being high, was nevertheless responsible for a 20% increase out of the total whopping 129%.
It is pertinent to point out that the Rs4.8 trillion public debt figure reflected the total public debt piled up since 1947 whereas another Rs6.2 trillion were added up by the incumbent government in just four years, exposing the sheer incompetence of the financial (mis)managers of the incumbent regime.
A senior finance ministry functionary pointed out that the Rupee: Dollar parity was 1:60 in 2007, and depreciated to 1:86 in 2011, adding Rs1.2 trillion to the public debt.
The economic managers of the incumbent regime have been relying on huge domestic borrowing to finance their budget deficits because of which the domestic debt has surged by 132 percent (Rs2.3 trillion) to Rs5.8 trillion in 2011 from Rs2.5 trillion in 2007.
With the country’s financial managers embracing the IMF programme, Pakistan’s debt misery has multiplied manifold. Pakistan has so far received a loan of $7.3 billion from IMF under its SBA programme of $11.3 billion but this loan is being used only to bolster foreign reserves and improve the balance of payment situation as it can neither be used for budgetary support nor be made a part of the development budget.
The official said that this massive debt has compromised the country’s sovereignty in the real essence of the word and the only honourable option was to widen the tax base and increase government revenues. The country’s current tax to GDP ratio has further declined to 8.8 percent, the lowest in the region. “With this tax to GDP ratio, no nation can ever break out of a crippling debt trap. Its time to either pay taxes, or pay the price of sovereignty,” said the official.
http://www.thenews.com.pk/TodaysPrin...ID=6182&Cat=13