The federal government, according to the State Bank of Pakistan, has borrowed from the scheduled banks an additional Rs 313 billion in the first 113 days of the current fiscal year, with new loans of Rs 584 billion taking the federal government’s total debt to Rs 2589 billion. All of this, additional burden is met by the printing of currency, to which the federal government has failed to break its addiction. This has been revealed by the State Bank in its latest report. The report shows that the federal government has not behaved responsibly in its response to the crisis facing it. It should either engage in reducing expenditure or in increasing revenue. Sufficient attention has not been paid to taxing agricultural incomes, because they are enjoyed by the members of the legislatures. At the same time, those who have entered the cabinets, swollen now to epic sizes in the name of coalition government, have refused to abate any of the elements of the luxurious lifestyle enjoyed at taxpayer’s expense. If the elected officials refrain from economizing, they cannot expect permanent civil servants to be more conscious of this than them.

One of the biggest problems revealed is that the new loans included Rs 270 billion to pay off previous loans. This indicates that there is no real means of paying off the debts that are being incurred now, and the government must borrow to stay indebted. Also, this impression, that a government can be run by borrowing from scheduled banks, which implies the printing of money, needs to be corrected. The government should be aware both that it faces a general election in months, and that one of the central issues of the election will be economic management. This will be so not just because the economy is always important, but also because it is passing through such a delicate phase at present.

The government needs to rein in its expenditures and present a more responsible image of itself, one which is more able to obviate the need for such massive increases of debt as the State Bank has revealed. The only means of control available to the government, of reducing, or rather reversing, the debt burden, has not been applied, which does not comment positively on the government’s economic management team. The present policy is leading towards the kind of inflation that costs governments elections, which should galvanise the government into action, even if it is left unfazed by the prospect of the collapse of the economy.