In the past three years the PTI government has added Rs 14.9 trillion to public debt, taking the total figure to Rs 39.9 trillion. That this figures is much more than double of what the previous government accumulated in its five-year tenure and the fact that Prime Minister Imran Khan campaigned on the premise of reducing this very figure once he came to power, is a glaring example of how badly he has failed to address systemic issues that have crippled the economy. The country’s total debt and liabilities now amounts to 100.3 –percent of GDP, which is well above the legally permissible debt limit according to the Fiscal Responsibility and Debt Limitation Act 2005. In terms of measures taken to improve the debt profile of the country, Mr Khan claimed in 2019 to bring the total figure down to Rs20 trillion and additionally set up a Debt Inquiry Commission tasked with investigating previous governments’ addition of Rs18 trillion to public debt. Not only has the PTI itself added around 77 percent of that 10-year debt accumulation to the total number in a matter three years, the report of the debt inquiry, despite the investigation’s completion, has been withheld by the PM. Looking at the figures, it is obvious that any such report would be more detrimental to the PTI than any other party.
Much of the increase is attributable to external debt that has ballooned from $95.2 billion three years ago to a record $122.2 billion, an increase that only adds to the already hefty burden of servicing foreign loans. What is more, the country has spent around $13.4 billion in mark-up and principal payments, all of which is again borrowed. A vicious cycle of borrowing to service debt is in motion with no end in sight. This is also precisely the reason why the present government has no major development projects to show for the astronomical debt accumulated over the past few years; it simply finances old debt.
In the absence of a firm and honest commitment to address the expenditure-revenue gap that forces the country to borrow so heavily, there will be no end to this debt trap. Meaningful tax reforms, expansion of the export base, improvement in security and ease of business to attract Foreign Direct Investment while reducing expenditures is the only way forward. The PTI was voted in as the party of change that would do away with the status quo. Unfortunately, so far, it is more of the same, if not even worse.
