The PML-N’s term is done. The newspapers carried advertisements on the last day showcasing the strong economic growth, low inflation, higher energy supply and the list goes on. Let’s attempt to draw an impartial picture based on government and central bank published numbers.

There is no doubt that the economic momentum has picked up to take GDP growth over 5 percent for two consecutive years and inflation has clocked below 5 percent for three years in a row. Thanks to lower oil prices which averaged $67.5/barrel in FY14-18 versus $109.1/ barrel in FY13.

Had the oil prices remained at FY13 level, the oil imports on aggregate basis would have been north of $35 billion. This implies current account saving of around $7billion per year or 2 percent of GDP. Anyways, the CAD jumped from $2.5 billion (1.1% of GDP) in FY13 to $14 billion (5.3% of GDP) in 10MFY18.

Lady luck was with PML-N; they could have capitalized on the window of low oil prices to instill tough structural reforms. The timing could not have been better as CPEC created space for required infrastructure expansion.

However, both federal and Punjab governments took the onus of development themselves and relied on government’s own sources to instill all the power projects and other network expansion. The modus operandi was simple; run expansionary fiscal policies and raise debt to move the economy on the growth ladder.

There are two sides of argument presented on piling debt. One by opposing economists who naively talk on absolute debt to confuse people by completely disregarding ratios in terms of GDP.

The other side is government which talks above the line debt in terms of GDP by completing disregarding the quasi fiscal operations which in essence is government debt. Thus the fiscal deficit is not exactly what is shown and higher imbalance is the prime reason for slippage in current account deficit.

The important point is on what direction the government has put the economy, which could have repercussions for the upcoming government. The economy is on the track of debt infused growth.

Let the numbers do the talking. The nominal GDP increased by 54 percent from Rs22.4 trillion in FY13 to Rs34.4 trillion in FY18. The number which depicts PSEs domination in the economy - domestic credit to PSEs jumped by 2.2 times in the past five years from Rs312 billion to Rs996 billion.

Technically, PSE debt should be the part of public debt. The irony is that the government came up with a mandate to restructure or privatize existing ailing PSEs, but left with opening new IPPs and expanding the role of old.

In case of external public debt, the pile grew by 42 percent from $51.2 billion to $73 billion; and external debt to PSEs is up by 48 percent to $2.7billion. The nominal GDP in USD increased by 36 percent from $231 billion to $314 billion. Thus, the run rate of external debt growth is much higher than economic growth to depict unsustainable trend.

The gross public debt number narrated by government increased by 68 percent to Rs24.1 trillion or from 63.9 percent of GDP in June13 to 70 percent of GDP in Mar18. If the cash balances of government are subtracted, the FRLDA definition debt increased from 60.1 percent of GDP to 64.1 percent of GDP. This is the number quoted by government, when in her defence that debt has not increased beyond the stipulated limit.

But they naively ignore the PSE debt and commodity operations, essentially owned by government. If that is added back, the toll increases from 64.4 percent of GDP to 69.8 percent of GDP. And to see the real picture, power and gas circular debt ought to be added.

The SNGP differential margin receivables was nothing in 2013 and today the toll is at Rs110 billion. This number has to be cleared and is essentially part is part of quasi fiscal debt. And once cleared, in order to arrest the increase, the prices have to move up significantly. The story of SSGC cannot be much different; but accounts have not been published since 2016.

In case of energy circular debt, the overdue receivables of listed IPPs stood at Rs234 billion (11 months of revenues) while the number was Rs44 billion (1month of revenues) in June 2013. Mind you, these numbers do not include unlisted IPPs including new ventures.

Over Rs300 billion is added by these two quasi fiscal operations and the toll could reach Rs400 billion if SSGC and unlisted IPPs overdue is added. Thus including PSE debt and circular debt into the equation, the overall public debt to GDP (minus accumulated cash) crosses 71 percent of GDP in Mar from 66.5 percent of GDP in Jun13 -by June the toll may add up by another 0.5-1.0 percent of GDP.

Now let’s see what the external scorecard reveals. The situation is simple - total external debt and liabilities jumped by $30.9 billion between Jun13-Apr18 while foreign reserves are up by a mere $6.5 billion.

The rest is gone in the thin air; and the need is to increase debt by $1 billion per month in FY19 to keep reserves intact at today’s level. The growth trajectory has moved on debt and without piling more debt the growth may simply fall like a pack of cards.