Country twice as indebted as in June 2008

Society Pakistan & World Affairs
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Country twice as indebted as in June 2008**

ISLAMABAD: The federal government’s debt obligations have almost doubled during the tenure of the incumbent government: latest official statistics show that the country’s debt has mushroomed to Rs12.37 trillion as of end August 2012.

Furthermore, the total debt figure is exclusive of a $7.4 billion loan from the International Monetary Fund (IMF), according to the State Bank of Pakistan. The IMF loan will be repaid out of the central bank’s foreign currency reserves, thus having no bearing on the national budget.

In June 2008, the central government’s total debt stood at Rs6.1 trillion. **Over the next four years and two months, a sum of Rs6.3 trillion has been added to the centre’s debt: it currently stands 103% higher than the level in June 2008. **The sharp rise in the debt burden has been attributed to rupee depreciation and large budget deficits incurred due to heftier power subsidies and interest payments on debt stock.

Meanwhile, domestic borrowing has increased to Rs7.8 trillion since 2008 – a sharp surge of 137.8% or Rs4.5 trillion. External debt during the last four years has also risen by almost 65%.

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What a performance :clap:

Aek baari phir Zardari? :@:

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Re: Country twice as indebted as in June 2008

Agencies and courts are not letting them concentrate, case closed.

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Re: Country twice as indebted as in June 2008

It's a bit of exaggeration to present the facts like this. A lot of this increase in the debt is mere exchange rate recalculation for last 4 years on our external debt.

The fact is total public debt of Pakistan stands at 55% of GDP as on today which compares favorably to India, Japan, US, England, Germany and vast majority of countries which have much larger public debts..

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Re: Country twice as indebted as in June 2008

Less then 60% of GDP and mostly internal but people still cry. We can talk all night why the debt reaches to such limits but regardless of such debt the banking system is sound and dynamics are looking towards growth, go figure !

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Re: Country twice as indebted as in June 2008

Over the last 20 years, so many times its been said that Pakistan would collapse economically but it always remains resistant.

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Re: Country twice as indebted as in June 2008

Pakistand debt always increases under PPP but where does all the money go, thats what I want to know.

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Re: Country twice as indebted as in June 2008

These countries have sound economies, and mostly stellar credit ratings. They have the ability to pay off their debts. Pakistan on the other hand holds a junk status. Pakistan's debts are paid off by taking more debts. Our so called GDP figures include money that comes in the form of aid and loans as well. Currency devaluation may have contributed to the bloating of the debt figure, but the article also says that domestic borrowing has gone up by 137%.
Pak govt survives with handouts from the US, and US engineered loans from IMF and world bank. At the ground level, Pak economy survives thanks to overseas Pakistanis and their hawalas, which run their families. Local Pakistani businesses pay meaningless taxes, and that is how they survive.
The fact that this government has put Pakistan in the fiscal gutter is no secret. Greece suffered from a similar problem, with a huge and overspending government, corrupt politicians, and look where they stand. Their pants are down, and they acknowledge it. PPP government thinks that they can solve problems merely by pretending they dont exist.

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Re: Country twice as indebted as in June 2008

I think it is totally unfair analysis..

If our government has much lesser public debt ratio ti GDP and is collecting much lesser taxes in percentage to GDP (less than 10%).. what does it mean..???

Our government is managing with much lesser resources compared to other economies. Means our government spending as a percentage of GDP is much lesser compared to other economies. One of the largest expense for our government is the interest payment because we have double digit base rate on rupee.. I can assure you that if US government has to pay double digit interest rates on their huge debt.. there will be no money available with the US government to pay even the salaries of government employees..

As far as our financial sector being bankrupt and has no ability to repay.. is a very big blatant lie...

Our financial sector is not only strong.. it's robust..

Our financial sector continues to lend the government compared to some developed economies where the government has to continuously pump in money to keep the financial sector afloat.. Our financial sector has resource placement which is largely secured compared to western economies where the finances are stuck up in housing, consumer and totally unproductive sectors which do not have capacity to repay.. Our people are poor but they live within their means and do not have life styles on borrowed money thanks to artificially low interest rates managed by FED...

Our macro indicators are strong.. we are not Greece.. although we have a management problem in the country specially in the energy sector..

I don't think economics is your subject and your post shows very limited understanding of the issues.. so please don't make these sweeping statements..

Pakistan has a strong economy with great potential for future. I have no doubt in my mind that investments, businesses in Pakistan will do much better than US, Germany, Japan etc in next 25 years.. Pakistan, India, Bangladesh, and China is the focus region for growth for next decades.. It's just that we have to sort out our management issues a little more than the other regional economy.

Last but not least.. these expatriate Pakistanis did not come from Mars. A vast % of the remittences come to Pakistan from middle eastern countries from poor labour class. Most of the educated class who emigrate to US and Europe use our educational resources to become doctors and engineers.. but never bother to contribute to our economy. Most of them just criticize Pakistan as a filthy place unlike Indian expatriates who never talk bad about India..

Indian expatriates are the biggest FDI contributors in India.. Pakistan's FDI does not show any significant contribution from expatriate Pakistan.. we just have remittences coming from poor labour class..

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Re: Country twice as indebted as in June 2008

Public debt to GDP ratio may reach 59pc | DAWN.COM

**ISLAMABAD, June 19: Pakistan’s public debt to GDP ratio, one of the economic indicators that show health of an economy, is expected to reach 59.3 per cent by the end of June 2012.
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The office of Auditor General of Pakistan in its audit report for 2011-12 cautioned the government to be vigilant about the situation which has almost reached `crisis level’.

**It warned that over 80 per cent of the debt crisis at the international level came at a debt-to-GDP ratio of less than 60 per cent.
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Pakistan’s huge debt and liabilities reached Rs12.1 trillion in fiscal year 2011. As a result of this huge debt, public debt service (principal and interest payments) also consumed 43.7 per cent of the government revenue in the fiscal year 2011. In 2008, the public debt was just Rs6.055 trillion which doubled in the past four years.

**At the same time, the public debt to government revenue ratio is also alarming, which is well above the level in the fiscal year 2007, before the onset of the economic downturn, the report said.
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**The Planning Commission of Pakistan in the annual report 2011-12 projected that the public debt to revenue ratio has reached 474 per cent. At the same time, it was reported that Pakistan public debt to GDP ratio in the past four years is hovering around 60 per cent.
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The report observed that the Fiscal Responsibility and Debt Limitation Act of 2005 could not achieve the core objective of the law.

“Neither revenue deficit could be eliminated from economy, nor could the public debt be kept within prudent levels,” observed the AGP audit report.

**Pakistan’s public finances, according to the report, are dominated by low and stagnant tax to GDP ratio, low development spending, and borrowing from banking system which resulted in hyperinflation, slow economic growth and widespread exchange losses in public debt portfolio.
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The report observed that due to lack of serious measures in terms of governance, the economy is on the path of a downward spiral.

**Except worker’s remittances, all other components of current account deteriorated during the second quarter of fiscal year 2012.
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Slow economic and export growth, cuts on development spending, energy shortage, pressures on IMF loan repayments and the biggest challenge of financing the current account deficit puts the economy in ‘royal trouble’.

The report said that borrowing purposes, goals, strategies and mandatory reporting requirements of public debt management in Pakistan might be legally defined, and government should follow best internal practices of definition of public debt with its disclosure practices.

The audit report said that Pakistan with over Rs12 trillion of public debt did not have a well functional, professional and dedicated debt management office for looking after effective public debt management.

Appropriate debt management office may be revived, the report recommended.

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Re: Country twice as indebted as in June 2008

what was Pakistan's debt to GDP ratio in 2008?

I might sound naive, but how is the GDP of the country increasing? In Musharraf's rule at least the industry went up, as well as telecom, infrastructure, services, banking etc.

During the past four years, we have seen woes in industry (industries closing or moving abroad), nothing extra ordinary in the banking or services sector. Is it increasing only through agriculture?

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Re: Country twice as indebted as in June 2008

Mushi rule was better than Zardari's

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Re: Country twice as indebted as in June 2008

Our govt has no source of income other than foreign aid. The only job creation done by this govt was in the public exchequer. Nothing has been done to invigorate private businesses and private jobs creation. Govt is not managing with lesser resources. Its simply not managing. All public sectors are damaged beyond recognition. PIA, railways, you name it.

The fact that we have to pay double digit interest on our loans is a matter of shame, not pride. Our govt is squandering what little they have on interest payment...and what little is left goes into corrupt pockets(rather the other way around).

You are right. Finance is not my subject. Kindly explain to folks like me how despite the fantastically rosy picture you painted, our country is mired in muck that is neck deep? If there is so much money to throw around, surely the power sector would have been fixed by now at the very least.

Pak govt borrowed 50 billion rupees from ADB to accommodate the payments to the thousands of excess employees they plugged into public sectors in a cronyism move that shamed the entire country. Surely they could have done that from resources within, since the banking sector 'is so strong'? And you are claiming that Pakistani govt does not live beyond its means.
India and China, yes. Bangladesh, maybe. But with governments like the current one, Pakistan, not in a million years can be the focus of the world from an economic perspective.. Rosy pictures and fiery speeches dont turn economies around. Action on the ground does that. All democracies in Pakistan have been a mess. The current government however, has been one of the most blatantly corrupt governments we have ever seen.

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Re: Country twice as indebted as in June 2008

^ private jobs created in last five years was highest in Pakistan history. One just need to check the growth status of Banking, Real estate, telecommunications, IT, live stock & agriculture sector to name few.

As far paying double digit interest for international loans, that is linked to country sovereign rating. Major reasons why GOP amass debt:

global banking crises
war on terror
International food & oil prices
massive floods
political instability

now core inflation is already in single digits with state bank interest rate @ 10% and coming in single digit this Friday. Wheat prices are just cut yesterday major reason is int lower prices of oil which is Pakistan major importer.

also care to explain with all the problems why export continue to rose....to highest point in history of Pakistan.

oh and KSE is the best performer by the way not because of speculation but from better then expected results from the corporate sector.

So it means don't get out figures from nowhere !

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Re: Country twice as indebted as in June 2008

^ banking, telecoms, real estate, infrastructure all were booming during musharrafs time, please give figures of the performance of these sectors and the jobs created during the past four years. I know many engineers who the jobless during the current regime.

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Re: Country twice as indebted as in June 2008

Despite global recession Pakistan’s economy has remain stable over last 4.5 years for most part.

Pakistan GDP Growth Rate

Pakistan GDP Growth Rate

The Gross Domestic Product (GDP) in Pakistan expanded 3.67 percent in the second quarter of 2012 over the previous quarter. Historically, from 1952 until 2012, Pakistan GDP Growth Rate averaged 4.98 Percent reaching an all time high of 10.22 Percent in June of 1954 and a record low of -1.80 Percent in June of 1952. The Gross Domestic Product (GDP) growth rate provides an aggregated measure of changes in value of the goods and services produced by an economy. Pakistan’s economy has suffered in the past from decades of internal political disputes, a fast growing population, mixed levels of foreign investment, and a costly, ongoing confrontation with neighboring India. However, IMF-approved government policies, bolstered by foreign investment and renewed access to global markets, have generated solid macroeconomic recovery during the last decade. This page includes a chart with historical data for Pakistan GDP Growth Rate.

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Re: Country twice as indebted as in June 2008

That’s not true. In Pakistan’s fiscal year 2011-2012, foreign aid was 255 billion rupees. Total government income from within Pakistan was 1900 billion rupees.

This means that foreign aid was only 13% of income. A far cry from your claim that there is no income other than foreign aid.

It’s all in the Ministry of Finance’s budget for the current year.
| Ministry of Finance | Government of Pakistan |](| Ministry of Finance | Government of Pakistan |)

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Re: Country twice as indebted as in June 2008

Interesting point in the budget:

Civil Pension: 30 billion rupees
Military Pension: 100 billion rupees.

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Re: Country twice as indebted as in June 2008

255 Billion figure is estimated, i am 100% sure it is lot less then that. Foreign Aid doesn’t mean free money it is actually subsidized interest loans.

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Re: Country twice as indebted as in June 2008

quarterly reports from there websites?
If few engineers you know are jobless it doesn’t mean whole economy is gone in the drain.

and about job performance it is better then all of south asia, a chart from World Bank study:

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Re: Country twice as indebted as in June 2008

^ the graph that you have given is from 2000 to 2010, I am not doubting the growth during musharrafs time. I want to find out the previous four years.

during Musharrafs time in telecoms we can see Warid/Wateen, burraq, Telenor, PTCLs privatisation and other small LDL operators. Not only jobs were created but salaries rocketed as well, then we had banking which also boomed during those years, as far as infrastructure is concerned big projects were started like development of road infrastructure throughout the country, gwadar, dams which provided employment to civil engineers, universities were opened in government and private sectors, retail was booming and even industry was in a much better condition. The industry especially of Punjab is suffering during the past 4 years, although I agree agriculture has done well.