The debt burden or deficit levels by themselves are not a particularly worrisome factor. Countries such as the USA are operating with far higher levels of debt and deficits than Pakistan. The danger is the relative inability of a government to govern and institute appropriate policies to improve the mechanism for enhancing the inflows. Having been embroiled in one self-created controversy after another, the focus of the Pakistan Government has remained on conflict and self-preservation at the cost of the country. Ill-guided expensive projects took precedence over ground realities and a will to bring genuine improvement through capacity building and revenue enhancement. This has delayed much needed reforms as the government continues to rely on a patch-work of policies in the different economic spheres, which come across more as knee-jerk reactions, rather than well-thought out policies and plans.
In FY2016-17 Pakistan’s foreign debt servicing amounted to US$8.16 Billion, up 53 per cent over FY2015-16. Of this amount US$6.54 Billion was in principal repayment, while US$1.62 Billion was the interest component. It is expected that there would be a rise in the debt servicing cost in FY2017-18 as the government continues to increase its borrowing to bolster reserves, given the precedent of having borrowed US$4.4 Billion at commercial rates in in FY2016-17 for this purpose.
Read Complete Article: Duty Enhancement – Another Knee-jerk Reaction?
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