The figures from the Economic Affairs Ministry for debt incurred in the first half of the current fiscal year show that the government is incurring debt at an unprecedented pace, not because it is growing the economy, but because of the debt trap. Not only is the country borrowing more than it ever did before, but it is also contracting the most expensive debt in its history. It should be noted that the debt is not being incurred for any productive use, such as investing in projects of building infrastructure, but in servicing previous loans or building up foreign exchange reserves to satisfy IMF preconditions.
The PTI government has clearly failed to generate non-debt-producing sources of foreign exchange, in the form of greater exports, greater foreign remittances by expatriates or greater foreign direct investment, and has to resort to borrowing to meet its needs. It must be remembered that the debt has ballooned in dollar terms, and since it is to be paid by rupee revenues, devaluation means even more pain. There is the question arising of how such resources can be raised, and why it is so necessary to be on an IMF programme, which has caused such pain for the ordinary citizen. The IMF preconditions are meant to secure the loans by ensuring that they can be repaid, even if it is at the cost of impoverishing the ordinary citizen. A source of trouble the government created for itself were the Naya Pakistan certificates and the Roshan Digital Accounts, which brought in foreign exchange, but at a very high cost. These are falling due now, and have to be met in foreign exchange. As they can only be met by incurring fresh debt, not because of greater non-debt-producing sources, they have become a sort of Ponzi scheme, which a government should not engage in.
The PTI had not only claimed that previous foreign debt had been misused, but claimed it would take the country out of the debt trap. Seemingly, it has not done so. Worse, it seems it has no solution but to borrow ever more, and as unproductively as before.
