Pakistan is not growing enough to justify the borrowing of the present government as the national exports are not sufficient enough for repayment of external loans. This was the gist of the second session of the 3rd National Debt Conference organised by Policy Research Institute of Market Economy (PRIME) in support of Friedrich Naumann Stifung here on Saturday in which participants stated that the country's economic growth and per capita income do not justify borrowing.
They said the public debt stock of the country has grown by seven times during the last few years whereas per capita income has increased only three times. Syed Abdul Khaliq of Social and Economic Justice made a presentation on 'fiscal responsibility and need of the audit of the public debt' and stated that the issue of debt was not only a political issue but it was also a critical social issue that was affecting citizens' fundamental rights.
He said that primary objective of Fiscal Responsibility and Debt Limitation (FRDL) Act was to reduce the revenue deficit to nil by June 2008 and thereafter maintain a revenue surplus, besides placing a cap on total public debt so that it should not exceed 60 percent of the GDP.
However, he further stated that present government has initiated the process of amending FRDL Act to restrict the public debt to 50 percent of the GDP by June 2033 after successive governments failed to comply with the FRDL Act to limit the country's public debt to 60 percent of the GDP. Khaliq in his presentation further stated what is more worrying is that during the last 10 years, revenue deficit has remained in negative zone, which means increase in revenue expenditure is more than the increase in revenue receipts and the debt liabilities are to be met by borrowing.
He added that the country's public debt is around 65 percent of the GDP, which was five percent higher than the limit imposed under the FRDL Act of 60 percent. The public debt-to-revenue ratio stood at 440 percent against the generally acceptable threshold of 350 percent.
The servicing of external debt and liabilities are on the rise and in 2014-15, the government met only 54 percent of the expenses from its own sources and the rest of 46 percent were covered through borrowing. He showed concern that the total of external and domestic debt as on July 2016 was Rs 22.5 trillion with $72.978 billion external debt and Rs 3.65 trillion domestic debt.
President Rawalpindi Chamber of Commerce and Industry, Raja Amer Iqbal stated that the government's borrowings are used to finance the operations of the federal government, while in fact the government should use the debt to create economic space for private sector to attract business community. He said that chambers of commerce have also been highlighting challenges to the economy thorough conferences but regretted that the governments have never listened to their demands. During the question answer session, the speakers said if the government wanted to do something with good intention on economic front, even the opposition would support it.
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