The debt-stricken country’s total debts and liabilities during July-March FY11 have swelled to Rs 11.239 trillion, a figure that account for over Rs 1 trillion or 9.9 percent more than what Pakistan owed during the whole of last financial year, 2009-10. During the last financial year, debts and liabilities stood at Rs 10.221 trillion while during the preceding year, FY09, it came out at Rs 8.746 trillion.
The gravity of the situation if highlighted if put in perspective, one whole quarter, April-June, of the ongoing fiscal year, FY11 is still left during which the already huge financial obligations are set to rise further. After completion, the outgoing fourth quarter is expected to witness the country’s debts and liabilities hitting new heights as it accounts for 68.3 percent of the country’s gross domestic product (GDP) during last three quarters ranging between July-March FY11.
During the last fiscal year, the country had seen its debts and liabilities accounting to 68.9 percent of the GDP. This exorbitant growth in Pakistan’s debts and liabilities is attributed primarily to the government’s voracious domestic debt accumulation which has swollen to over Rs 5.462 trillion during the first three quarters. This shows an alarming growth of 17.3 percent or Rs 808.6 billion in monetary terms when compared with the Rs 4.654 trillion the government borrowed from domestic sources during the whole of the last financial year.
State Bank of Pakistan (SBP) data illustrates that during the first three quarters, the government’s domestic debts have grown to 33.2 percent of the GDP as compared to 31.4 percent of FY10. Heavy domestic borrowing, naturally, pushed the country’s public debts skywards to stand at Rs 10.206 trillion registering an increase of 12 percent or Rs 1.989 trillion when compared with last year’s figure of Rs 9.107 trillion.
The country’s external debts and liabilities, however, depict a moderate growth owing mainly to the stalled tranches of the International Monetary Fund (IMF). During the three quarters, the country’s external financial obligations rose to Rs 5.079 trillion. This exhibits an upsurge of 6.3 percent or Rs 301.6 billion when compared with Rs 4.777 trillion of FY10.
During July-March FY11, the country’s external debts, IMF debts, external liabilities, private sector external debts and Public Sector Enterprises (PSEs) external debts stood at Rs 3.887 trillion, Rs 762.6 billion, Rs 93.8 billion, Rs 239.4 billion and 96.1 billion, respectively, against FY10’s Rs 3.667 trillion, Rs 690.3 billion, Rs 95.9 billion, Rs 217.8 billion and 106.5 billion. In terms of GDP, the country’s total external debts and liabilities stand at 30.9 percent during the first three quarters against 32.2 percent of last year. During the period under review, the federal government owed over Rs 793.4 billion on account of commodity operation and PSEs debts. While during last year the government’s total borrowings under the above heads amounted to Rs 896 billion. As the next fiscal budget is to be unveiled at the end of this month, most probably on May 28, the federal government is reported to have rallied enough political support in the upper and lower houses of the Parliament to broaden the existing tax base that the foreign and local critics aptly say is one of the lowest in the world.
The IMF and other international loaning agencies have long been pressing on the need for Islamabad to tax the untaxed segments, including agriculture, in Pakistan where tax to GDP ratio is nine percent. According to economic observers, Pakistan must increase the tax to GDP ratio by 15 percent in line of the performance of other developing countries.