Ideas are dangerous. Last year this column kick started a discourse by writing an article titled The Dark Underbelly of External Loans (published May 2014) that led to a first of its kind National Debt Conference (NDC) co-organized by Business Recorder and Prime Institute in October 2014.

Building up on that discourse this year, Prime Institute took the discussion further by organizing the sequel to the NDC earlier this month that shed some new light on the subject, albeit one of the central issues - the National Savings Scheme - was left untouched.

There are many aspects to debt. To that stand out are: sustainability of debt and management of debt. This piece would focus on the former.

First the bad news: that Pakistan's debt is increasingly becoming unsustainable, an issue which many donor agencies and multilaterals are shy to talk about. The good news, however, as Dr Kaiser Bengali said at this year's NDC is that Pakistan is still far from Greece. "Pakistan is not headed on the Greek Road yet, and so there is no need to press the panic button. But there is still a need to raise the alarm," said Bengali who currently consults for the Balochistan government. And there are a few main reasons to raise the alarm.

While Pakistan's debt-to-GDP may not be at dangerously high level compared to many others in the region and in the world, the other key ratios - such as debt/revenue, interest cost to revenues, or external debt to forex or exports - are not very favourable. One globetrotting economist, who doesn't usually like to be named, aptly noted that Pakistan must do away with its obsession with debt-to-GDP ratio, and instead focus on sustainability concerns that other ratios bring to light. To that end, he also suggested a change in Fiscal Responsibility and Debt Limitation (FRDL) Act.

Speaking of FRDL, here are two other specific changes that need to be made in the FRDL Act. Addressing the NDC, Abdul Wajid Rana, former Secretary Finance, maintained that the FRDL should be made stringent and there should be a mechanism for parliamentary oversight to ensure deviations from the FRDL are sorted out within stipulated time frame.

He also insisted that a clause be added for mandatory debate in the parliament on government's policy statements and that the parliament should be given an opportunity to give its obsevations. Rana also asserts

that there should be some kind of sanction or penalty on the incumbent governments, if the limits in the FRDL are crossed without adequate justification. Given the government's debt management performance in comparison to the FRDL Act, one finds these suggestions rather tenable.

Of course, sustainability also demands that the denominator - such as tax revenues or exports - is improved significantly, but enough has been said on those two subjects in this column and elsewhere. On a related note, however, the second main reason to ring the alarm bells pertains to the CPEC factor and the IMF.

In his keynote address at the NDC, Dr Hafeez Pasha, Managing Director, of the Institute of Policy Reforms, cautioned that 2018 will be a critical year for Pakistan since most of the accrued debt is scheduled to be paid by then. Pasha said that if Pakistan is to successfully pay its debt by 2018, without the help of IMF, it must increase its exports by 50 percent between now and FY19. Pasha also highlighted that the CPECs impact on Pakistan's debt liabilities means that debt to revenue ratio will reach 752 percent by FY19 up from its current level of 643 percent.

As if these were not enough reasons to ring the alarm bells, Saqib Sherani, former economic advisor to the government, opened another Pandora's Box. He rightly argued that one has to take a holistic picture instead of limiting oneself to the narrow definitions of public debit. The table from his presentation published here shows that Pakistan's debt and other liabilities are much higher than perceived.

To that end, this column would advocate the need to push the government towards accrual based accounting so that pensions and other liabilities are also incorporated to help get a clear picture of what will the future generations owe.

We hope that the independent working group proposed by Dr Pasha to promote the debate on debt would have accrual based government accounting on its agenda because it correctly measures, accounts and accrues for all forms of government debt and liabilities. There are many other items that this column would like the working group to stress on. Some of those - especially from the debt management point of view - will be highlighted in the ensuing columns, but for now we would like to close this discussion by emphasizing the need to turn the DPCO into a real middle office which prepares and implements the debt management strategy and manages market, credit and operational risks.

We know that the government is currently working with the World Bank (funded by DFID), where nothing radical has happened to date. The programme is still in the first year and going forward the test will be whether the donors are able to get the Finance Ministry and the SBP to give up part of their empire in the interests of a coherent debt management structure.