Pakistan’s outstanding debt and liabilities reached Rs44.6 trillion as of June 30, 2020 going past the size of its economy, according to the statistics the State Bank of Pakistan published on Thursday.
The total debt and liabilities increased by more than a tenth in the latest fiscal year and now stand at 107% of its GDP, which stands at Rs41.7 trillion, according to the central bank’s data.
This is much higher than the 60% limit as described under Pakistan Fiscal Responsibility and Debt Limitation Act 2005 and it has been above this line since the time of PML-N government. In fiscal year 2018, the last year of the PML-N government, the total debt and liabilities were Rs29.8 trillion or 86.3% of the GDP, therefore, the present set-up has added another Rs14.8 trillion to the national debt since then.
This mountain of debt leaves Pakistan with no money to spend on its people. This is because more than 40% of its budget is spent on repaying the previous loan. Successive governments have failed to meet tax collection target, which results in lower revenue. On the other hand, they end up spending more than what’s allocated in the budget. Higher spending and lower revenue creates large budget deficit, which is then plugged through more borrowing and the cycle goes on.