Economic Vulnerabilities | Editorial

Debt time bomb
Whatever the outgoing government has achieved on the economic front, or otherwise, it has done so on the back of a record 50.6pc ($31b) increase in external debt, which cumulatively stood at a colossal $91.8b as of end-March. And considering the trajectory and the time interval, it would not be wrong to assume that the psychological $100b mark might not be too far as the new fiscal approaches. Also, approximately $15b of old loans are due next year, which is why Miftah Ismail tried to get on the right side of international financial institutions during his recent spring meetings in Washington, though with very little luck.
Add to that the 10-hour daily load-shedding for industry announced for Ramzan – on top of the strange tripping at Tarbela that blacked out two provinces for 10 hours on Monday — and it becomes crystal clear just why PML-N’s claims of laying the foundations of an economic revolution are just election-talk. The Ramzan electricity schedule now has Aptma (All Pakistan Textile Mills Association) up in arms. Already most textile export businesses have shut down shop in Pakistan and moved away precisely because of the high cost of doing business, especially electricity and gas. Now once again industry is put aside because of the added sensitivity of a Ramzan so close to the election.
PML-N must be made to explain just what made it increase total debt by more than 50pc? It could not be, of course, that all of the $31b was eaten up by mega projects and motorways. Whichever party now forms government will have to immediately scramble to pay back old maturing loans, to the tune of many, many billions, and then also make provisions – that is incorporate more loans – for operational expenses of the government. Debt numbers, economists say, never lie. And Pakistan’s debt became a time bomb long ago, but it seems it is set to detonate sooner rather than later now.

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