The debt riddle

Pakistan has a serious debt problem, and it is getting worse with each passing year. The $100 billion or so foreign debt is pinching, and so is the circular budget deficit, which is again on the surge as currency depreciates and imports surpass exports. Having agreed that there is no magic wand to address this issue, until and unless the government hits a jackpot of recovering stolen money and assets stashed abroad, it has placed a requisition to borrow on the floor of the house. While the National Assembly holds the purse of the nation, it is seized with a debate to authorize Rs26.3 trillion, which roughly accounts for three times of the volume of the federal budget. This borrowing will obviously have an adverse impact on the health of the economy, and underlines the necessity of redrafting our priorities in an earnest attempt to get rid of the vicious circle of debt accumulation.

Somewhere beneath this debt-servicing trauma lies a political resolve as well. Prime Minister Imran Khan had pledged to reduce the total debt and liabilities to Rs20 trillion from his inherited Rs30 trillion. But stagflation has played havoc and the same has risen to Rs50.5 trillion, according to latest SBP figures. This is an enigma of statistics, and the nation is on the receiving end. One estimate says that the government has borrowed on an average of $1.1 billion a month to stay afloat. Thus, loan repayments have surged to almost 80 per cent in the ongoing fiscal year, confronting starkly on the face of the government.

Some out-of-the-box solution is needed to stem this year-on-year tendency. It can only be done if Pakistan reorients its economic matrix, and national institutions mandated with recoveries in all realms perform to their maxim. Accountability should be seen to be done. Likewise, the lifestyle and budgeting must undergo change, if the country has to be saved from an international default. Pakistan needs a vehement strategy to generate wealth and maximize its production. Imports must be legislatively stalled to necessary developmental machinery, and peg the currency. That is a plausible way to repay public debt and shore up national coffers