Each Pakistani now owes more than Rs127,000 as our national debt – the government’s borrowing – has increased by more than a fifth in a year.
The national debt stands at Rs26,452 billion or $190 billion as of November 2018, according to data released by the State Bank of Pakistan on Monday. This is 21% higher than what we owed to the world as well as local lenders a year ago.
The government is facing a double loss. On the international front, for every dollar earned, we spend two, which leads to a trade deficit. On the local front, the government’s revenues are much lower than its expenses, leading to a budget deficit.
This double loss leaves the government with no money of its own to spend on essential imports that keep the economy afloat, and on development, such as building schools, hospitals, roads and dams. To finance its budget deficit of Rs2.12 trillion and trade gap of $18.9 billion, Pakistan has been relying on domestic and foreign loans.
As of November 2018, our foreign debt stands at Rs9,129 billion which is $65 billion while the domestic debt is Rs17,322 billion.
This amount has to be paid by Pakistanis through taxes, such as those deducted from your salaries and those you pay on petrol and numerous other purchases.
More than 60% of the money Pakistan borrowed from foreign institutions and governments last year was meant to keep the country’s foreign exchange reserves high enough so it could avoid bankruptcy or default on previous loans and pay for essential imports.
The total debt is now 76% of our gross domestic product (GDP), which stands at Rs34,396 billion. This level is higher than the permissible limit, which should not exceed 60% of the GDP.