Economic vulnerability rising with over-dependence on loans
“There are three kinds of lies: lies, damned lies and statistics” is now an overworked witticism. Over the past week, two viewpoints regarding our national debt have been aired but the layman is no more the wiser. Another pertinent cliché in assessing the truth of the national debt can be: ‘figures may not lie, but liars may figure’ – that is, deliberately twist available data and fudge it.
The device of furnishing inflated figures on basic issues such as the country’s annual growth rate has been practiced here. The result was an embarrassing readjustment of the embellished and clearly optimistic data provided earlier. Since the national debt has mushroomed, becoming a staple media topic, the finance minister himself spoke recently on its actual size and sustainability. His theme was twofold: liabilities contracted in his tenure increased by 9 pc, as compared to 2008-13, in which it averaged an annual compounded growth rate of 19 pc, and second that Pakistan’s debt burden would rise further to fund essential development projects. External debt as at end June 2016 was at a manageable $57.7 billion.
But latest finance ministry figures reveal the net public debt as being over Rs 18.28 trillion, a 35 percent increase during the PML-N’s tenure so far, from Rs 13.48 trillion three years ago. Behind this surge is a 40 percent rise in domestic debt, from Rs 8.686 trillion to Rs 12.14 trillion, while foreign debt increased 28 percent to Rs 6.14 trillion from Rs 4.796 trillion. Other rosy aspects highlighted were reduction in the budget fiscal deficit, GDP growth of above four percent in the last three years and steady foreign currency reserves.
But this debt overdependence is ominously intertwined with the dark reality of our tumbling exports and foreign remittances, lack of foreign direct investment, reduced competitiveness of our products, plus other factors. Transparent common sense decisions, practical policies, a clear and determined vision, and a visible and Spartan austerity, especially among the leadership and elite, are essential to live the good life after debt.
