Every Pakistani owes over Rs57,000 in debt

Published: February 2, 2011
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Per head level increased by Rs22,000 since 2008.

Per head level increased by Rs22,000 since 2008.

ISLAMABAD: Every Pakistani man, woman and child owes over Rs57,000 to foreign and domestic lenders, which is approximately Rs22,000 more than the per head level when the current government took over.

Only this year, almost Rs900 billion will be consumed to service the huge debt stock, which is five times more than the revised federal development budget.

According to the Debt Policy Statement, for the first time in Pakistan’s history, the country’s total debt and liabilities touched the Rs10 trillion-mark in September 2010. The federal government has borrowed over Rs5 trillion from domestic sources and approximately the same amount from international lenders. According to the Federal Bureau of Statistics’ “population clock” as of February 1, the country’s total registered population was 175 million, which means each individual owes up to Rs57,057.

“High public debt can adversely affect capital accumulation and growth via higher long-term interest rates, higher future distortionary taxation,  inflation, and greater uncertainty about prospects and policies,” cautions the debt office.

As of June 30, 2008, Pakistan’s total public debt stood slightly over Rs6 trillion that amounted to Rs34,500 per Pakistani (at present population). But, during its two-and-a-half-year tenure, the Pakistan Peoples Party-led government has added Rs3.5 trillion (excluding liabilities) to the total debt stock. Including liabilities, the difference comes to Rs4 trillion, which is much more than this year’s total national budget, according to official papers.

“Sharp rupee depreciation and large budget deficits massively added to the debt stock,” said former debt director-general Dr Ashfaque H Khan.

In the last financial year, the current government has added another Rs1.3 trillion to the debt stock, excluding liabilities. As of June 2010, total public debt (excluding liabilities) stood at Rs8.9 trillion. The debt statement shows that the government borrowed Rs798 billion from domestic sources and Rs189 billion from external sources to finance fiscal operations in just one year. Additionally, the government borrowed Rs271 billion from the International Monetary Fund for balance of payments support and, because of the rupee-to-dollar depreciation, Rs200 billion were added to the debt stock without borrowing a dollar.

The Debt Office warns that inappropriate debt structure could become a source of vulnerability to the real economy and financial system of Pakistan. It cautions that low-cost foreign currency denominated debt is the biggest risk due to an unexpected currency shock. On the other hand, heavy reliance on domestic debt may crowd out private sector credit demand besides pumping inflationary expectations.

The government has also violated an act of the parliament while aggressively borrowing to meet its expenditures. The Fiscal Responsibility and Debt Limitation Act 2005 requires the federal government to reduce public debt and maintain it within prudent limits. But, the government has violated the act on various accounts. The legislation bounds the government to reduce revenue deficit to nil-zero gap between revenues and current expenditure and maintain it in surplus. However, according to the debt statement, instead of maintaining surplus, revenue deficit was approximately 2.1 per cent of the total size of the economy.

The government also violated the act on account of reducing the debt stock by 2.5 per cent of the total size of the economy and instead added almost another one per cent to the debt stock during the last financial year.

The third breach occurred on account of issuing sovereign guarantees. The act restricts the government from issuing new guarantees of more than two per cent of the total size of the economy in any given year. But, the statement reflects that the government issued total guarantees of 2.7 per cent of the Gross Domestic Product.

Published in The Express Tribune, February 2nd, 2011.

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Reader Comments (50)

  • Hafiz shah Ali
    Feb 2, 2011 - 8:51AM

    Let us get serious; the whole nation is being lead down a path of economic mess by people who according to media reports do not pay tax and and a good percentage have fake degrees.

    There has to be serious focus on getting the country out of economic quagmire , playing footsie will not do.Recommend

  • sandy
    Feb 2, 2011 - 8:55AM

    Rs 900 billion to service existing debt in one year !! Its a great achievement, as great as having 100 nuclear weapons !! Well done Pak.. Recommend

  • Impact
    Feb 2, 2011 - 9:08AM

    “The federal government has borrowed over Rs5 trillion from domestic sources and approximately the same amount from international lenders. According to the Federal Bureau of Statistics’ “population clock” as of February 1, the country’s total registered population was 175 million, which means each individual owes up to Rs57,057.”

    180000000 x 57057 =10,270,260,000,000 Thats great, don’t repay.
    Congratulation !Recommend

  • M Bilal
    Feb 2, 2011 - 9:35AM

    All these debts by PPP government in last three years just to finance thier corruption. Extremely sorry state of affairs. The debts will easily double by the time this government complete its tenure:(Recommend

  • moise
    Feb 2, 2011 - 9:46AM

    I dont own anything. Ask the trucker in government to chit that out. Buzz off.Recommend

  • Javaid Ahmed
    Feb 2, 2011 - 10:37AM

    I have an easy solution to decrease per head debt…we should double our population and the present 57,000 will decrease to 28,500.Recommend

  • Ahmed Iqbalabadi
    Feb 2, 2011 - 10:42AM

    This is extremely unfair analysis of the debt issue. Using this metric of National Debt / Population, then every person in the USA owes more than USD45600!!!! (http://www.brillig.com/debt_clock/)

    You want to compare this to other countries too?

    Instead of explaining the reasons and the problems facing the state, we are focusing on these statements that generate rhetoric.

    If I read this news item, can I infer that each Pakistani will be taken over by creditors if the state doesnt pay?

    Express Tribune shouldnt tow the line that other media houses are following.Recommend

  • Sheeraz Nasim Khan
    Feb 2, 2011 - 10:47AM

    Dear Mr. Shahbaz Rana,

    Our national debt of Rs8.9 trillion is a colossal amount of money on our heads. But as a socially responsible Pakistani Citizen and believing that no one can change Pakistan but us Pakistanis, I am willing to step up and pay Rs.28,500/- to start with which is half of my share of Rs57,000 (the per head debt on each of us Pakistani’s). Please let me know where and when to pay? Can we arrange for a transparent financial mechanism to make this possible?

    I would one day like to see a free, independent and prosperous Pakistan!

    Regards,

    Sheeraz Nasim Khan Recommend

  • Feb 2, 2011 - 11:23AM

    Oh wait, you still haven’t built the Parliament lodges. With so much debt, who would notice a little more? Why deprive the poor politicians?Recommend

  • Sankalp
    Feb 2, 2011 - 11:35AM

    Does it even matter at a time when Pakistan’s nuclear arsenal edges past India’s to be the world’s fifth largest nuclear power. Bravo! It should continue its efforts towards becoming the Numero Uno.Recommend

  • Ashraf
    Feb 2, 2011 - 11:59AM

    @Javaid Ahmed: That is the first practical and workable idea I have heard from anybody to solve this debt crisis. Wonder why nobody thought of this before!! Are you sure you don’t want to be in charge of the country’s finances?Recommend

  • Tony Singh
    Feb 2, 2011 - 12:19PM

    “Man is born free but is everwhere in debt”. A point for consolation. Japan has 700% debt to GDP ratio.Recommend

  • Tony Singh
    Feb 2, 2011 - 12:34PM

    What is debt to GDP ratio? That will give clearer picture.Recommend

  • Sheeraz Nasim Khan
    Feb 2, 2011 - 12:44PM

    @ To all: Lets be rational and practical! Either you choose to sit and talk about current affairs or do something about it! I prefer the latter and thats why I repeat that I am ready to put up Rs. 28,500 out of my own pocket as phase 1 to pay-off our national debts.

    Regards,
    Sheeraz Nasim KhanRecommend

  • Wow
    Feb 2, 2011 - 12:51PM

    @Ahmed
    well said but that debt is due to growth in every sector ,best infrastructure and good standard of living not due to CORRUPTION ,TERRORISM &RELIGIOUS MINDLESSNESS as in PakistanRecommend

  • Anoop
    Feb 2, 2011 - 1:09PM

    One day, Pakistan will achieve parity with India. One day, Pakistan’s Debt will equal to India’s GDP. The day is not far.Recommend

  • Ahmed Iqbalabadi
    Feb 2, 2011 - 1:43PM

    @Anoop:
    India’s National Debt is USD 2.55 trillion and that is 78% of its GDP.

    Pakistan’s National Debt is currently 60% of our GDP. What world are we living in? As I said, such reporting is just irresponsible from Express Tribune. You got to be different from others and differentiate between fact and rhetoric. Recommend

  • kamal
    Feb 2, 2011 - 1:49PM

    There is one thing good about growing population,it makes lower per person debt for the country…so keep on addingRecommend

  • Naeem Siddiqui,Australia
    Feb 2, 2011 - 2:00PM

    @Tony Singh

    Pakistan’s Debt to to GDP ratio is 61%, which is certainly not good.Recommend

  • Naeem Siddiqui,Australia
    Feb 2, 2011 - 2:06PM

    @Anoop

    India’s Debt to GDP ratio is 78% which much higher then Pakistan’s, could you please shed some light on this :)

    http://www.visualeconomics.com/gdp-vs-national-debt-by-country/Recommend

  • saurabh
    Feb 2, 2011 - 2:11PM

    Are you people sane? More population means more expenditure by govt. and hence total debt would increase.Recommend

  • Asmat Jamal
    Feb 2, 2011 - 2:27PM

    If I pay my debt, will I be spared for rest of my life!!!!Recommend

  • Anonymous
    Feb 2, 2011 - 2:41PM

    @Naeem Siddiqui,Australia:
    Statistics can be misleading.
    1. Its not 78% but 129% in India’s case and 158% in China’s case. Japan has 700% and host of european countries in between. What does it mean? It means that these govts have invested to build infrastructure for future growth. Its what you do with that money. Sadly in Pakistan’s case substantial amount is going into servicing its present debt and into mantaining armed forces.Recommend

  • Ahmed Iqbalabadi
    Feb 2, 2011 - 2:56PM

    http://www.economist.com/blogs/blighty/2011/01/britainspublicdebt
    Kindly have a look here: UK’s Debt to GDP touches 100% or GBP1.3 trillion!!!! WOW! Recommend

  • Abhi
    Feb 2, 2011 - 3:16PM

    I have solution give birth to more and more children,So that debt get distributed :)Recommend

  • A Chatterji
    Feb 2, 2011 - 3:33PM

    @ Naeem – India has several mechanisms to pay of its debt which Pakistan doesn’t. More and more foreign banks are coming up to finance big business houses and even State-run institutions because they know its not the same old India who will rely on IMF or World Bank like it used to back in the mid 80’s and early 90’s.Recommend

  • J Oberoi
    Feb 2, 2011 - 3:53PM

    @Naeem Siddiqui,Australia: Debt to GDP ratio has to be seen in light of growth. India is doing 9% so you’d expect it to be pretty high.Recommend

  • Feb 2, 2011 - 3:55PM

    Will Patriotic Pakistani’s pay their taxes – or just get excited that India’s tax-GDP ratio is higher?Recommend

  • Dumbo
    Feb 2, 2011 - 4:41PM

    Wow we Pakistanis have overtaken India in two things. One was the nuclear arsenal and now the per ca-pita debt. Kudos to the Pakistanis politicians !Recommend

  • A Pakistani
    Feb 2, 2011 - 5:13PM

    The PPP government has violated all the fiscal and monetary laws that govern finance. Merely printing currency notes and (1) giving salary raise to government employees (2) massive pay outs with arrears to SSGC reinstated emplyees (3) payment to flood affectees (4) bailing out bleeding public sector enterprises every year are some examples.

    Not that all of these should not have been done. But all payout should have been financed through government revenues. By taxing the rich not just printing paper money.

    The biggest factor is the elite style and size of the people’s government. Remember Qadir Gilani using a black bullet-proof Toyota Land Cruiser imported from Dubai. But the PM keep telling us that he will work for the benefit of the masses This is just the tip of the iceberg. We do not know the whole story. But soon we will know it all ! It is just a matter of time.

    The current finance team are the same old hats playing nothing but a game of snake and ladder with economy. Our economy is getting bitten every moment and we struggle to somehow crawl again.

    Robinhood use to rob the riches and pay the poor. This government is following the reverse Robinhood formula. “Rob the poor and pay the rich.”

    Very soon the government will get sucked into the pothole that it has created.

    Recommend

  • Halaku Khan
    Feb 2, 2011 - 8:20PM

    I think the topic was about Pakistan and its debt.. where did India come in from? lets scroll up and see.. Sankalp and Anoop :OO
    Mr. tightDhoti, i guess you will have to change dhotis now.Recommend

  • J Oberoi
    Feb 2, 2011 - 9:11PM

    One way to staunch the deficit blowout is to stop paying Rs.1500 a week to stone-pelters on Fridays in Indian Kashmir. There are thousands of youths who earn their living like this and the money comes from Pakistan. Surely now you’ll think about cutting back. Recommend

  • syed maududi
    Feb 2, 2011 - 10:32PM

    every country has debt. every one is in debt. this is not a unique situation. infact Pakistani debt is minuscule. i am not condoning this rubbish government.indians need to look at their 800million poor before talking about us. Recommend

  • http://www.djrocknews.blogspot.com
    Feb 2, 2011 - 11:31PM
  • Feb 3, 2011 - 12:47AM

    @Ahmed Iqbalabadi: your comparisons with other countries is apart. Atleast they have been able maintain a healthy GDP ratio, the inflation rate, and life of the public in general.

    Here none of them has been achieved, the expenditure to our education has been lessened.
    When the last government took over there were $45 billion of debts, which were reduced to $38 billion at their departure, also the national treasury was a mere $1.8 billion, which rose to $16 billion which shows that there were significant changes in the economy.

    Not just economy got such an uplift, so many development sector took a rise, example being telecommunications. Pakistan stands amongst the most fastest growing in telecommunication sector.
    Since the taking over this government, so major development projects have taken place, no multinational has invested in our country, rather stopping their progress what so ever.
    Seeing the fact USA has over $3 trillion of total debts, but they have been able to provide their citizens with all the best facilities, only the bad period came recently was the recession which they have by now got over it. One very amazing thing, for almost two year we’ve had power shortages, and what our government did was, got the most expensive RPP’s into play recent example being the 2 ship based power plants imported from Turkey, which marks being the most expensive power generation facility ever. Kudos to everyone.
    So it would be rather not justified to defend the present economic conditions for the failure that the present government has made. Also must take in mind, all the bad decisions have taken place , as a result destroying our economy.Recommend

  • Shahzeen
    Feb 3, 2011 - 12:53AM

    each one of us owes 57000!!!!! the government is to be blaimed BUT we the Pakistanis should also cut down are WANTS!!
    ITS HIGH TIMERecommend

  • URTruth
    Feb 3, 2011 - 3:15AM

    every american at birth owes upwards of 43,000.00 Usd Plus whatever they would end up owing in terms of car loans, credit cards, store cards, mortgage and student loans.
    They pretty much die pennyless.
    Grass in not always that green…………………Recommend

  • sandy
    Feb 3, 2011 - 7:44AM

    India’s poverty population is now 27%., where are you getting these imaginary numbers of 800 million? Pakistan studies? No doubt..Recommend

  • Dr Imran Khan
    Feb 3, 2011 - 2:12PM

    NEGATIVE POLICIES, INCOMPETENT LEADERSHIPRecommend

  • S
    Feb 3, 2011 - 9:07PM

    Most of this debt is due to historical military expenditure. Cut down defense expenditure, pay down the debt. And maybe actually have money left over to provide some services to Pakistan’s poor. Recommend

  • Grace
    Feb 3, 2011 - 9:32PM

    @J Oberoi: Such a strange comment. I agree that people in Pakistan should focus on lowering our debt regardless of India’s debt. We need to wrroy about our own house but you have dragged Kashmir into this topic. So here goes!
    Why not just allow a vote in Kashmir as mandated by UN resolutions on the matter. Let the people of Kashmir determine freely if they wish to be part of India or become free with Pakistan.Then India won’t have to spend the millions on soldiers to police the state and terrorize the people there.Recommend

  • bhutjolokia
    Feb 4, 2011 - 2:51AM

    Pakistan:

    Riddled with external debt to vile foreign institutions.
    Pakistan needs to improve it’s tax base just to reschedule it’s interest payments.
    Foreign reserves are 1/3 of exteral debt.
    Negative credit rating. 4th riskiest sovereign debtor. Can borrow only at extremely high rates. Government too weak to enforce unpopular fiscal measures.
    Weak GDP growth.
    Dependent on foreign aid.

    India:

    India’s debt is largely public. Only 250 billion USD is external. Exposure to IMF and other external parasites is minimal.
    India foreign reserves entirely cover it’s external debt.
    India is nowhere close to defaulting. India is foreclosing it’s foreign debt accounts.
    Stable credit rating. India can continue to borrow cheaply.
    Indian government can take steps to reduce it’s subsidies. Just enacted measures to reduce fuel subsidy bills.
    India’s GDP growth rate is staggering.
    Solid tax base. Taxes are actually decreasing.Recommend

  • Feb 4, 2011 - 5:37AM

    Thats good that know that I owe so much. Guess I MUST have so much at one point of time? Err?Recommend

  • J Oberoi
    Feb 4, 2011 - 6:54AM

    @Grace: I could say the same for Balochistan. Listen it is time we faced up to the fact that both countries will stick to their own positions. There are no issues left to be ‘settled’ anymore simply because both nations will not budge. An uneasy peace is the best we can expect. But what claim have you got against England?Recommend

  • Hassan Bokhari
    Feb 4, 2011 - 2:49PM

    So what? Every citizen of America owes more than $40,000 in debt… whats the bad news in Pakistan? Rs.57,000 is less than half or a tiny fraction of some peoples monthly income.Recommend

  • kamaal
    Feb 4, 2011 - 3:32PM

    @Grace…Can you pls turn your finger towards yourself and do the same in Baloochistan,where your own courts are saying that people are getting “disappear”….Recommend

  • nasir kazmi
    Feb 4, 2011 - 10:53PM

    the amount should be written off against all the lives which our nation lost to save the US people safe from the terrorist. We love US$$$$$$$$$$$$$$$$$$$$$$.Recommend

  • Zazi
    Feb 5, 2011 - 9:51AM

    @Hafiz shah Ali:
    One would do what you suggest if you had a stake in it. Pakistani ministers and bureaucrats have no intention of paying a single penny of this debt. They will disappear to cooler climates and enjoy their wealth as they are disconnected from the state. Its a psuedo democracy here to loot. The so called free judiciary has not convicted one person since being reinstated. The politicians, the judiciary and the army are playing games with the state at the expense of the people. Any chance of Egypt happening here??Recommend

  • Zazi
    Feb 5, 2011 - 10:00AM

    Why don’t we just have the debt (state bank and commercial banks) written off as we have done in the past by defaulting. We will declare ourselves bankrupt as all rich people in Pakistan do and life will go on as usual. Be Happy, Don’t Worry Recommend

  • Singh
    Feb 5, 2011 - 10:32PM

    Its very minimal.

    You can have 800% debt and survive.but the problem is instability and war on terror.

    Pakistan is too much dependent on western and american controleld WTO.

    On the other hand,china only uses pakistan to involve india.
    Why cant china pay off pakistan all time deficits.

    Problem is that there are no free lunches in world.All countries are running for their own interest,Its time pakistan to raise from ashes and prove its credibility.There are just few steps it can take to
    minimize it defense expenses.

    1.Promote SAARC and SAFTA
    2.Economic dependence is bigger deterrent than nuclear bombs
    3.Once SAFTA is fully function,the south asian region will have trade investment of 250 billion dollar by 2015.pakistan will have access to 1.35 billion other south asian market.pakistan will be biggest beneficiary of safta.private sector will boom.South asia will be connected and full region can grow at 8+%.
    4.Are there any border disputes in european union?No…With mutual interest in each other region,south east asia will stabilize and everyone should have right to move to any country and work with no boundary.Disputes will be solved automatically.

    5.Recommend

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