According to newspaper reports, the total public debts of the country stood at Rs17.5trillion in June 2015, but reached Rs20.6trillion in September 2016, showing an increase of around Rs3trillion in one year. In terms of percentage, the government has crossed the threshold of public debt-to-government ratio of 350 percent which has reached 442 percent.The hard fact is that the government has exhausted its funding for the development of human resources. How the policymakers will generate new funds in this situation should be understandable to the general public keeping in view the past experiences where the executive orders have disfigured the shape of the tax system in the country. On the external front, the total debt liabilities in June 2015 stood at $61.4 billion, but crossed $74 billion mark a year later. In percentage term, the external debt crossed 14.5 percent last year. The government has issued the Debt Policy Statement 2016-17 which is the first statement after the government amended the Fiscal Responsibility and Debt Limitation (FRDL) Act of 2005 in June last year. The internal and external debts are continuously increasing in the absence of a reliable fiscal discipline.
The financial experts question the ability and capacity of the government to manage public debts and liabilities which are increasing with every passing year. The government is looking further loans to run its affairs and the imprudent policies and other knee-jerking steps have left little hope that the government will be able to even deal with the Chinese investment. Experts are already cautioning over the debt servicing which is looming large in the near future, especially the government should have to prepare to pay the bill of Chinese investment in infrastructural projects. The government amended the Fiscal Responsibility and Debt Limitation Act to increase the limit of public debt-to-GDP ratio, allowing it to cross the public debt beyond 60 percent of the total size of national economy. Earlier, the limit was below 60 percentbut the gross public debt-to-GDP ratio reached 66.5 percent last fiscal year after the amendment.The current fiscal constraints speak of the inability of the government to boost the revenue generation through taxes. Industry is the principal revenue generation sector, but imposition of new taxes has curtailed not only investment, but also production capacity of the industrial units. The government took various steps to rein in corruption and document the economy but the steps are mostly backfired.
Enactment of laws and reforms are the processes and the society, which still could not recover from the colonial past, cannot be purified with one blow. The government should have to gradually introduce reforms and taxes during its journey toward self-reliance. Looking for further loans is not an answer to the economic woes.
