Restructuring do not decrease debt. Restructuring reduces current debt servicing cost and in consequence actually increases debt every year by adding reduced debt servicing cost of restructured debt.
How debt got reduced:
Between 1989 and 1999, Pakistan international credibility went to zero, and thus thug governments of NS and BB could not borrow low interest loans. So, instead of low interest loans they started taking high interest dollar loans. They also increased dollar debts from ~$17 billion in 1988 to ~$40 billion (in 11 years of their corrupt rule). Actually, in late 1998 and early 1999 Pakistan even defaulted on their debt servicing.
When Musharraf took over power, external debt situation was dire. Anyhow, Musharraf government along with servicing existing debts on time (taking out money from budget to service debt on time), used dollars saved from reduction in debt servicing of restructured debt to pay off high interest Pakistan external debt. Musharraf government also raised some low interest dollars debt to pay off high interest dollar debts that further reduced debt servicing cost without increasing debt. Resultant debt during Musharraf government instead of rising, started going down. Anyhow, end result was that debt stayed more or less constant throughout his period; that started shooting up once political thugs came back to power again.
Ok it makes sense, I think there is something wrong in this table because in the IMF graph the values seem pretty constant. So do you think that the values would be inclusive of restructured loans as well?
Well, check Pakistan external debt on graph you posted (that is from State Bank of Pakistan and has to be correct). You will see the debt situation. Debt restructuring happened in 2001. You will see that debt in 2001 was $36 billion. Debt was still $36 billion in 2002 (after restructuring). Anyhow, debt reduced to $35 billion in 2003 (reduction in debt happened because of paying it off). At the end of 2004, Pakistan said good bye to IMF.
So that confirms my previous post that Musharraf government inherited $38 billion and when he left it was around $40 billion, and now the current regime has taken it over $60 billion. It makes sense that the debt was still there (as a liability) but was restructured over a longer period and at lesser interest rates and should show up in the financial/budget statements.
So that confirms my previous post that Musharraf government inherited $38 billion and when he left it was around $40 billion, and now the current regime has taken it over $60 billion.
Yes and what has been the ratio of military budget since inception of Pakistan? Because, at this time supporter of 20-25% budget allocation to military may come up with the theory that its the need of hour due to war on terror (fighting for others), which is also a gift from two dictators Zia & Mushi.
while you guys do the calculations dont forget following two factors:
1. is all the expense born by the army or govt takes care of some of it. like pensions etc. who pays the pension, govt or army
2. what about the income generated for the army by its commercial ventures. NLC , cement etc. that income also adds to the expenditure of the army
National debt on Pakistanis is of two types, foreign dollar debt and domestic rupees debt.
Total debt = foreign debt plus domestic debt.
I think above quoted figures is for total debt per Pakistani and not foreign debt per Pakistani.
Well, why don’t we do calculation ourselves? … Here is Pakistan population, debt in dollars (as state bank graph shows), $ to Rs exchange rate, equivalent debt in rupees (using prevailing exchange rate of the year)… and thus foreign debt per Pakistani.
Debt figure is till 30 June of the year (as Pakistan end of financial year is 30 June):
Year … Pop (m) … debt ($) … ex rate (Rs/$) … eq debt (Rs) … foreign debt per Pakistani (debt in rupees divided by pop).
Above figures are as calculated. I cannot predict about future.
As for domestic rupee debt, this is also increasing fast since 2008 … @ 25 percent a year and has more than doubled in last 4 years. Here is data of Pakistan domestic debt since June 2000 to Feb 2012:
FY 2000 (at the end of June 2000): Rs 1578 bn
FY 2001 (at the end of June 2001): Rs 1731 bn
FY 2002 (at the end of June 2002): Rs 1717 bn
FY 2003 (at the end of June 2003): Rs 1853 bn
FY 2004 (at the end of June 2004): Rs 1979 bn
FY 2005 (at the end of June 2005): Rs 2149 bn
FY 2006 (at the end of June 2006): Rs 2321 bn
FY 2007 (at the end of June 2007): Rs 2601 bn
FY 2008 (at the end of June 2008): Rs 3266 bn
FY 2009 (at the end of June 2009): Rs 4038 bn
FY 2010 (at the end of June 2010): Rs 4895 bn
FY 2011 (at the end of June 2011): Rs 6231 bn
2012 (till Feb 2012): Rs 7215 bn
(FY ends 30 June 2012, so by then debt would increase further)
Shows that Pakistan domestic debt increased from 1578 bn in June 2000 to 2601 by June 2007, or by 64.8 percent in 7 years
But then … it increased from Rs 2601 bn in June 2007 to Rs 7215 by Feb 2012 … or 177 percent (almost tripled) in last 4 and half years.
