Is IMF catching Pakistan in a debt trap?
Khalid Mustafa
Pakistan’s public debt has alarmingly swelled to whopping figure of Rs9 trillion meaning thereby that every person and even a child who is yet to be born will come to this world with a gift from the incumbent regime of debt of Rs54,000.
The incumbent regime has virtually failed to improve its economic landscape as it could neither succeed in enhancing the tax base for revenue nor curtail its expenditure owing to which budget deficit is not being controlled.
The domestic debt stood at Rs3275 billion till June 2008 that swelled by Rs586 billion to Rs38,616 billion by June 2009. Now the domestic loan has increased by Rs792 billion to Rs4653 billion from June 2009 up to June 2010. In last two years, the debt increased by Rs1378 billion pulling up the public debt to over Rs9.2 trillion. Pakistan’s debt to GDP ratio has increased to 61 percent from 55 percent.
Apart from the huge debt, in the outgoing fiscal, the budget deficit stayed at 6.2 percent against the revised target of 5.2 percent which was originally at 4.9 percent.
So much so the government has failed to implement VAT from July 1, 2010 and it also seems that the government will not be able to implement the reformed GST from October 1, 2010 if the rifts between the centre and provinces on GST collection on services are kept in view.
The incumbent regime also ostensibly lacks the will even to withdraw the exemptions from 5 powerful sectors of economy.
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