As foreign debt obligations have reached 162 percent of the annual foreign exchange earnings, the debt servicing capacity of the country has significantly weakened during the last four years. According to former State Bank governor Dr Ishrat Husain, the ratio of liabilities have reached the highest level in one decade, which was equal to 124 percent of the foreign exchange earnings in 2008. The external debt servicing has also gone up to 16 percent in four years which was 13 percent in 2013, showing that it would consume up to 30 of the export receipts. The ‘credit’ goes to the beleaguered finance minister for the pathetic financial situation of the country who blatantly claims to have achieved macroeconomic stability. The domestic debt has mounted to a whopping Rs 15.4 trillion. Economists believe the growing trade deficit due to continuous decline in export earnings should have set off alarm bells as the rapid depletion of foreign exchange is a cause of concernfor the policymakers. The volume of the gross public debt was Rs14.3 trillion of gross domestic productswhen the PML-N took over the office in 2013 which has grown to Rs21.4 trillion in four years.
According to financial experts, the government will have to take proactive approach to manage the external account keeping in view the external debt of $83. Meanwhile, the government has obtained another loan of $450 million to boost foreign currency reserves in the backdrop of inconsistent financial management. The budget deficits are expected to cross the ratio of 5.8 percentwhich had been recorded during the previous fiscal year. It appears the government has lost the success which it achieved in the form of economic gains in its first three years in the office. To cover the loss of $2 billion in foreign currency reserves during the first quarter of the current fiscal year, the government took another loan to arrest the situation. The rupee is losing its value against dollar despite Finance Minister Ishaq Dar’s commitment to keep it at a certain level. The maintenance of forex at the cost of economy is a blunder the government is committing and it will cost heavily to the coming generations. In absence of a major reform or policy, the industrial sector is on the downward trajectory. No one knows what will happen to the debt-ridding economy of Pakistan in coming years.
