December 26, 2015 Print

Chronic government debt can cripple a country’s economic prospects and mortgage the futures of taxpayers, and Pakistan has a national debt-to-GDP ratio of 64 percent — an amount that soars as high as 75.1 percent when additional government liabilities are taken into account, according to economist Sakib Sherani. Pakistan-based Atlas Network partner Policy Research Institute for Market Economy (PRIME) is calling attention to the problem of pervasive public debt through its annual National Debt Conference, held for the second time in December 2015.

“Mr. Ali Salman, Executive Director PRIME Institute, said that it is difficult to imagine a debt-free government even though balanced budgets can be produced,” a PRIME press release reported. “Thus, effective debt management, both through constitutional provisions of fiscal limitations and parliamentary oversight over debt transactions, is critical. He said that the purpose of National Debt Conference is to create awareness about debt structure, sustainability and management for intelligentsia, policy-makers, debt managers, business community, media, academia and public at large.”

The conference brought together a wide array of debt policy experts, economists, public officials, and bankers to provide their perspectives about how best to manage and reduce government debt. Participants included economist Hafiz A. Pasha, managing director of the Institute of Policy Reforms; Ethesham Rashid, director general at the Debt Policy Coordination Office of Pakistan’s Ministry of Finance; Kaiser Bengali, consultant for economic affairs for the government of Pakistan province Balochistan; Abdul Wajid Rana, former Pakistan secretary of finance; Masud Al Taj, deputy director of the State Bank of Pakistan; economist Sakib Sherani; development expert Vaqar Ahmed; and Shimail Daud, president of the Chamber of Commerce and Industry of Pakistan’s Rawalpindi District.

“The reasons behind Pakistan’s rising public debt can be classified into two broad categories; macroeconomic factors, and governance factors,” PRIME wrote, summarizing the rising debt problem in its March 2015 study “Public Debt Management and Way Forward.” “At the one end, Pakistan’s failure to reform its tax system is causing its fiscal deficit to bloat to unmanageable levels. At the other end, large external accounts deficits have added pressures to take external loans. In addition, sharp depreciation of currency has also added to the pile of debt. Aside from these macroeconomic indicators, poor economic governance is also to be blamed for Pakistan’s increasing stock of debt. These include the lack of political will on the part of successive governments to reform the country’s power sector, public sector enterprises, as well government institutions and overall bureaucracy.”