While it is no doubt a serious matter that Pakistan’s total debt went up from Rs6,000 billion in 2008 to Rs30,000 billion in 2019, it would appear that the inquiry commission being formed to look into the matter is being asked to answer the wrong set of questions. It was clear from Prime Minister Imran Khan’s midnight speech after the budget that the answer he wants is to know whose pockets the money went into. This is not the wisest question to ask about state-sector borrowing. This is also not to say that there is no corruption when the state spends money, but that the connection between state borrowing and corruption is not a straightforward one. The answer to why Pakistan’s total debt has grown so high lies in asking questions about policy, not law-enforcement. There is certainly a need to understand what went wrong.To most observers, the answer has been fairly straightforward. State spending has increased much higher than the increase in revenue collected. For those who have watched budget after budget in the last decade, the same story has been repeated. Taking on debt is the standard mechanism for governments to spend money – not just in Pakistan, but around the world. There are three additional explanations for why debt increased after 2008. One, government debt across the world increased after the 2008 financial crisis. Two, especially after signing the CPEC agreement, the government of Pakistan pursued a fairly expansive development policy, which pushed state-sector spending higher each year. Three, if debt was stable in the decade of the Musharraf rule, it was because foreign aid flowed in due to Pakistan’s role in the US war on terror. This meant the borrowing could be kept in check as the government and imported technocrats set about creating the consumption-driven economy that is at the heart of the current economic crisis. The increase in debt is a problem of policy – which is connected to the fiscal and current account deficits. How state finance works need not be studied by a commission. Instead, what needs to be asked is why we are still following the same imported policy paradigm that brought us here in the first place.
from The News International - Editorial http://bit.ly/2MMmKoT
Friday, June 14, 2019
Politics of debt
Related Posts:
Politics of ECLThe haste with which the federal government placed 172 people, including the Sindh chief minister, on the Exit Control List on the basis of a JIT report has drawn considerable criticism – not least from the Supreme Court itse… Read More
Getting rid of polioWith a new government promising a brand new Pakistan, the question is whether we will be able to finally eliminate polio from the country. Minister for Planning Khusro Bakhtiar has stepped up and made the bold promise to elim… Read More
Gas crisisWinter is here in full swing – and with it, the now traditional winter greeting of low gas supply. At a time when domestic gas supply is essential in all parts of the country, Pakistan’s gas troubles peak. This annual traditi… Read More
Entitled killersFor a person who built his career on denying suspects their lawful rights, disgraced police officer Rao Anwar should feel embarrassed by all the privileges he feels he deserves. Most prisoners charged with murder do not get t… Read More
Confusion galoreTill two days back, Dr Farrukh Saleem was seen as the government’s spokesperson on economic and energy issues. That changed rather abruptly after a TV talk show appearance by Dr Saleem, in which he came across as critical of … Read More
0 comments:
Post a Comment