Galloping public debt

Pakistan's federal government debt has climbed to a staggering Rs82 trillion and is growing by roughly Rs16 billion every single day. According to recent SBP figures, Pakistan's public debt increased by 7.8% over the past year, outpacing average inflation and dwarfing economic growth. Even more alarming, short-term external debt skyrocketed thirteenfold in just one year, going from Rs201 billion to Rs2.7 trillion.

While the total debt figure is due to the collective failure of all of our governments, past and present, the mountain of short-term debt is almost entirely the product of the incumbent government's policies. Making things worse is the fact that this crisis situation is not being given due attention when there is still enough time to present real solutions. The Auditor General of Pakistan flagged an irrational budgeting anomaly for loan repayments that apparently led to Rs1.83 trillion in additional expenditure. Meanwhile, the country's top debt management office has been headless for six months, underscoring the government's lack of interest in actually addressing the underlying problem.

Unfortunately for the people of Pakistan, the effects of rising debt are painfully real. Interest payments alone have surged past Rs8 trillion, consuming nearly half of the federal budget. Every rupee spent on servicing past loans is a rupee stolen from schools, hospitals and roads. The IMF does not expect the government to make a dent in debt servicing costs, and the World Bank estimated at the height of the Iran War that 10 million more Pakistanis could be pushed below the poverty line this year.

Every path forward is fraught. We cannot afford to keep letting the debt grow, but without significant sustained economic growth, debt as a share of GDP will keep rising. Attempts to raise government revenue are also failing. Tax reforms are tried and fail every year, while privatisation of underperforming state-owned enterprises is more a method to cut costs, rather than raise revenue, and is at best a complementary measure.