Crushing public debt
Further underscoring the economic miseries of the people is a figure in the Ministry of Finance’s annual report on per capita debt, which went past the Rs200,000 mark for the first time. Debt per capita rose by 21% in just one year between June 2021 and June 2022 which, worryingly, was well before the record inflation and devaluation in the current fiscal year, meaning the real number today is actually much higher. The fiscal policy statement, which should be placed before the National Assembly in a few days, is a scathing indictment of the PDM and PTI governments — the PDM’s inability to fix what was broken and the PTI’s broken promises of fiscal responsibility.
While the report rightly calls out former finance minister Shaukat Tarin’s “prioritising economic growth at the cost of a higher fiscal deficit” as being one of the reasons for the “problematic fiscal situation”, it does not appear that the incumbents have learned this lesson any more than the PTI, since Prime Minister Shehbaz Sharif and Finance Minister Ishaq Dar are wholeheartedly going down the same road with unsustainable and unnecessary projects. The report also says that consumption-driven economic growth was part of the problem, as investment-backed growth is more sustainable. It notes how the intentional overheating of the economy post-Covid by encouraging consumption created the illusion of economic prosperity, even though productivity was mostly flat.
In fact, the steep decline in the government’s non-tax receipts — down 46% —actually reflects the artificial nature of the growth PTI leaders are claiming as an achievement. But there was veiled praise for the PTI, as the report slammed Tarin’s “expansionary fiscal policy stance” for reversing “the consolidation gains achieved in the preceding two years” which corresponds with the PTI’s first two years. Meanwhile, unnecessary subsidies continue to be a drain, and the government still refuses to cut them to a sustainable, or at least less nauseating level.
Published in The Express Tribune, March 8th, 2023.
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