According to the latest data released by the State Bank of Pakistan, the total external debts and liabilities of the country have shockingly increased to $83 billion a t the end of fiscal year 2016-17. A sum of $9.1 billion was added to the debt in June this year alone, indicating the imminent danger of financial crisis where debt servicing could come as major issue for the nation. With regard to the size of the economy, the debt and liabilities have increased to 78.7 percent of the gross domestic product, which is more than the bench mark of the world financial institutions for developing countries, including Pakistan. In a report issued earlier, the International Monetary Fund had assessed the external debt at $79.1 billion, but the government has failed to apply brakes on acquiring loans. In rupees terms, the country’s total debts and liabilities have increased to Rs25.1 trillion, exposing the ability of Finance Minister Ishaq Dar as fund manager. Mr Dar takes credit for stability of rupee, but in financial terms, he is a total failure and his claim of financial stability also remains a myth than reality.
The debt burden on average Pakistani has also increased from Rs91,000 in 2013 to Rs120,381 in 2017, showing an increase of 32 percent in four years. The growth in total debt and liabilities was 11 percent last year, showing only one fact that economic situation is going from bad to worse. The bank data suggests the total debt is now equal to 75 percent of the gross domestic product while the gross public debt has increased by Rs1.732 trillion in one year. Instead of bringing reforms in the financial sector, the government allegedly opted to revise the definition of public debt. The current public debt is itself a violation of the law and original limit set under the Fiscal Responsibility and Debt Limitation Act, 2005. The burden of loans is again pressuring the government to rationalize the rupee value. If rupees is devalued, the external debt would phenomenally grow to an alarming proportion. It is the classic example of financial failure and blind acceptance of loans is another example administrative failure.
It time the government policymakers should stop lip service and take some practical steps to save the country from a possible default.
