Debt per person

Debt per person has shot up by almost 50% during the PTI government’s tenure, according to the recent fiscal policy statement prepared by the finance ministry. But it is not just the debt figure that is disconcerting. A report in this paper notes the self-contradictory nature of the statement, which appears to cherry-pick numbers to make the government’s performance look better, while still containing several errors. Among the concerns cited was the use of a GDP figure that has not been approved by the Pakistan Bureau of Statistics (PBS), although approval was reportedly a problem because the PBS governing council has not met for several months due to disputes over its chairmanship. In addition, the latest GDP figure was based on only the first three quarters rather than the full year.

Meanwhile, various parts of the report pick and choose GDP numbers from different years to increase or decrease figures, depending on whatever claim the authors were trying to make. Interestingly, where no GDP figures would help the government make a point, the report conveniently sidestepped the issue. Chief among these was the Fiscal Responsibility and Debt Limitation Act (FRDLA) limit requiring the budget deficit to be less than 4% of GDP. While most governments have violated the limit, this was perhaps the first time one has tried to ignore it entirely. The deficit, by the way, was 6.7% of the latest GDP figure. There is also some irony in the fact that the report itself is prepared every year to comply with the FRDLA.

But whatever creative accounting the government uses to put a shine on its management of the economy, we only need to talk to a few random people on the street to confirm that the economic realities, by any measure, are grim. Creative accounting will not control inflation, raise wages, reduce the trade deficit, or curtail the debt burden. The only solution to this is through effective policymaking. Unfortunately, this government has proven that it would rather obfuscate than legislate, a problem that will only worsen if the opposition continues to try and pull the rug out from under it.

Published in The Express Tribune, February 11^th, 2022.

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