Pakistan’s debt stands at Rs23.608tr in Feb 2018

ISLAMABAD: Under a constant ‘Godzilla-like’ debt burden, Pakistani economy has been rapidly borrowing and since year 2013, it ballooned by 59.37 percent (or Rs9.3 trillion) to Rs23.608 trillion by end February 2018.

If today, Pakistan decides to retire all its public debts, it has to forego more than two-third (or 68.63 percent) of its Gross Domestic Product (GDP). Pakistan’s GDP volume is at Rs34.396 trillion at present.

This also indicates that Pakistan violated the fiscal responsibility and debt limitation act (FRDLA) which calls for limiting debt to GDP ratio below 60 percent. It indicates that every Pakistani is indebted with Rs113,625 which is several times more than what the government spends on health and children education, Pakistan’s Economic Survey 2017/18 revealed. Pakistan’s population is 207.77 million. It is worth mentioning that as Pakistan’s external debt is counted in dollar terms, and currently the external debt is $91 billion, so with the depreciation of Pakistani rupee the debt is increasing in rupee terms. It indicates if the rupee depreciates by one rupee, it amasses Rs91 billion debt on the economy.

In 2001, Pakistan Public Debt (external and domestic) was at Rs3.68 trillion that almost doubled to 6.126 trillion in 2008, when General Pervez Musharraf left the power, but at the end of five-year PPP-led government in 2013, it rose to Rs14.318 trillion. So far in Nawaz Sharif government, it jumped to Rs23.608 trillion.

Of the total public debt, External Debt and Liabilities (EDL) stock stood at $91 billion at end February 2018, out of which external public debt was $69.3 billion. In two months Jan-Feb 2018, it added $2.4 billion more to the external debt stock.

In 2013, when this government came into power, external debt was $48.1 billion and since then it has increased by $21.2 billion. It is worth mentioning that since late 2015, rupee has been held at around 105 to the greenback till end of December 2017, but after the central bank’s decision of allowing the rupee to depreciate in December 2017, it has now slide to around 118 rupee to a dollar. It means that, since December, Pakistan external debt in rupee terms increased by Rs1.18 trillion.

Economists believe that the public debt of an economy increases when it is unable to meet its expenditure through own resources.