According to newspaper reports, Pakistan has been caught in a deadly debt trap as its internal debt has crossed Rs 22trillion mark in the first quarter of the current fiscal year while the external debt have soared up to Rs 6.1 trillion. It is also feared that the budget deficit would cross 6.1 percent of the gross domestic product to reach around Rs 2.2 trillion in the current fiscal year.Reports also suggest that there is no letup in acceptance of foreign loans or getting internal loans by the government and the situation is reaching a breaking point. The federal government managed to get multiply loans in the first two months of the current fiscal year alone as the public sector organizations have failed to curtail losses. The government is continuously injected billions of rupees in the Pakistan Steel Mills, Pakistan International Airline, in power projects and dozens of other public sector organizations. The total liabilities of the country have increased to 78.7 percent of the GDP in a condition where the foreign currency reserves have already been fast depleting. The incessant flow of loans, instead of investment, is apparently mortgaging the coming generations at the hands of the international financial institutions.
The country is already facing political uncertainty and pressure groups have made the government hostage to their demands. A handful of people have sieged the federal capital, the finance minister has failed to appear in the accountability courts to face corruption charges and the finance ministry is working without a minister. In this situation, how the nation can expect economic growth is a million dollar question. The previous government of Nawaz Sharif has not missed any opportunity to get loans from international financial institution. But economic situation remained the same as instead of development of industry, steps were taken to encourage imports.
The acquisition of loans at high market rates, slow industrial activities, energy crisis, and law and order all contributed their part to slow down the economic activities. Though various foreign businessmen have ensured to invest in Pakistan, but the government has still lagging behind in developing necessary infrastructure for the purpose. The World Bank, in one of its reports, feared that Pakistan could miss the key targets set for the current fiscal year. The government will have to create industrial surplus if it wants to earn foreign exchange and it has to give tax concessions to attract foreign investment in business, trade and industry.
