Mortgaging Karachi airport

Published: February 14, 2013
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The Quaid-e-Azam airport is likely to continue being profitable, the government has been incautious in selling bonds against it. PHOTO: PPI/ FILE

The Quaid-e-Azam airport is likely to continue being profitable, the government has been incautious in selling bonds against it. PHOTO: PPI/ FILE

Pakistan’s budget deficit has now soared to such astronomical levels — over one trillion rupees at last count — that the government has had to resort to creative means to finance its operations. In the current fiscal year, the government raised Rs182 billion by issuing a Sukuk, or Islamic bond, which offered returns against the Jinnah International Airport in Karachi. This is because the government’s economic performance over the last five years has been dismal. To deal with the budget crisis, it has printed money at an alarming rate, causing runaway inflation. Private lending by banks has also ground to a virtual halt as almost all loans are now given to prop up our empty exchequer. This is unsustainable but the government has shown no inclination to cut down its expenditures.

Issuing bonds is preferable to other methods of raising money but it is unwise to use vital installations, like the biggest airport in the country, as the security for these bonds. Airports serve a vital national security purpose and so, while the Quaid-e-Azam airport is likely to continue being profitable, the government has been incautious in selling bonds against it, since there is a slight possibility that an attack, etc. could cause the airport to suspend functions. How the government will then be able to pay out returns on these bonds is unclear.

This government’s term is about to end but the next administration will have to make the budget deficit it inherited its first priority. Soaring energy prices and the resulting circular debt has bankrupted the country and there seems to be no way of countering that. Paying off our debt and bridging the deficit is a duty that must be borne by all of us. Raising revenue simply will not be enough. It must be accompanied by austerity measures to bring down government expenditure. An obvious area of belt-tightening is the bloated defence budget but no government has had the courage to question the military. But for the sake of our economic survival we will need to declare every aspect of the budget open to scrutiny.

Published in The Express Tribune, February 14th, 2013.

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Reader Comments (6)

  • gp65.
    Feb 14, 2013 - 4:37AM

    “This is unsustainable but the government has shown no inclination to cut down its expenditures”

    The 4 main constituents of expense are:

    Debt servicing
    Defense
    Salary and Pensions of government employees/retired employees
    Subsidies to loss making public sector companies like PIA, railways, steel mills and periodic infusions into the circular debt mess.

    The development expenditure has absolutely been cut to the bone and such as it is , is probably covered by item no. 3 i.e. salaries (of teachers, doctors, nurses etc.)

    Cutting 3 and 4 can only be accomplished by seriously cutting headcount which no elected government wants to do. Cutting no. 2 is not an optionin a country where the army owns the country rather than the other way around. So the answer lies in incresing revenue there is little give on the expense side.

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  • islooboy
    Feb 14, 2013 - 3:52PM

    @gp65.:
    defence cuts when when india is plaaning a cold start doctrine and we are fighting a war in tribal areas is not a wise thought

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  • islooboy
    Feb 14, 2013 - 3:54PM

    why does ET wants cut in defence spending when india is going bizark in defence spending? a better option is to privitize white elephents

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  • gp65
    Feb 14, 2013 - 8:08PM

    @islooboy: Actually you may not be aware of facts. In order to meet his commitment to not have more than 5.3% deficit, India’s finance minister did cut defence expenditure. IT was such a non-event that it never was reported in ET. In Pakistan despite 8.5% fiscal deficit no one has the guts to review defence expense. Anyway, if you read what I have said, I said what you did i.e. the army will not let Pakistan cut its defence expense – so the only choice that will be left with government is to increase revenue since there are no methods to reduce cost in a significant manner.

    https://zarabol.rediff.com/cuts-in-defence-budget/8339677

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  • Hold your horses
    Feb 14, 2013 - 8:23PM

    @islooboy:

    Why should a country try to match India on defense budgets ?
    Its an absurd thought. India is far bigger and it’s economy can absorb such expenses…

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  • A. Khan
    Feb 15, 2013 - 8:08AM

    If we can cut nonsensical expenditures like an army of absolutely useless & clueless ministers, all getting perks running into tens of millions, then maybe we can start to set an example in controlling expenditure. Government should not act as an employment exchange but devise policies that encourage private investment that generates jobs.

    The tenure of this PPP government has been an unmitigated disaster for the country. Runaway inflation, power shortage, gas shortage, corruption, insurgency, terrorism. Name one good thing that has happened. Was this the “best revenge” promised to the people ?

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