LAHORE -  Pakistan’s debt is ever increasing and never come down since 2007. Pakistan added $1.6 billion in external debt in 8 years (2000-07) but PPP govt added $19.6 billion in just 4 years (2008-11). Pervez Musharraf (1999-2008) added $23 billion. Prime Minister Nawaz Sharif, during his election campaign, made tall claims that on assuming power he will get rid of the “cancer of external debts” and promised to break the begging bowl but, after coming into power, he proved no different from previous PPP government and Musharraf regime and started knocking the doors of international lenders more vigorously than the PPP.

Soon after assuming power, the PML-N govt secured $6.7 billion IMF loan in Sept 2013. Furthermore it has acquired $2 through the launch of Eurobonds. This is too much, must be unacceptable. Our next generations would face the dire consequences of this huge loaning policy. Thus all the previous governments, may it Pervez Musharraf, the PPP or the PML-N; all have made huge borrowings, pushing the country into debt trap. The debt burden is mounting every day leaving little space for the government to spend on much-needed social sectors; health and Education.

These views were expressed at a consultation with lawyers, organized by Institute for Social and Economic Justice (ISEJ) and Islamic Relief Pakistan under campaign “Breaking the chains of debt”, here at local hotel.

Speaking on the occasion, Sarmad Iqbal, campaign coordinator of Islamic Relief said Pakistan loan burden is becoming unsustainable and people want to know the details of the public debt; reasons of its accumulation. He said in view of the prevailing situation, the people of Pakistan are no more ready to bear the burden of the mounting debts. We must demand an audit of the public debt of Pakistan. All new loans contracts should be made subject to Parliament debate and approval. The govt must stop reckless international borrowing and minimize reliance on foreign loans in future. As an alternative source of revenue generation govt must increase tax to GDP ratio through progressive taxation. It must take other measures to get rid of debt decency.

ISEJ Executive Director, Abdul Khaliq addressing the meeting explained the background of mounting debt burden of the third world debt. Discussing Pakistan debt situation, he said careful analysis shows that fresh IMF EFF program has been designed to extract as much as possible from working people, to pay for the crisis of big business and international finance capital. The IMF intervention in Pakistan looks similar to its program for Greece—which has deepened the recession in that country, reducing working people’s conditions to miserable levels, increasing unemployment, imposing deep wage cuts, and wiping out social programs.

As of June 2014, total debt liabilities of Pakistan stands at Rs.18, 241 billion. The foreign debt stands at Rs.4, 791 billion and domestic debt stands at Rs.10, 907 billion. Debt to GDP ratio stands at 63% and debt servicing ratio stands at Rs1100 billion. The external debt servicing has reached close to $7 billion in FY14, which is almost 80 per cent of the current reserves of the State Bank. The country paid $6.820b as debt servicing in FY14, including $5.910b as principal amount and $915m as interest. Worryingly, 47% of whatever the government generates in revenue is going to pay off the debt against 44% in the previous year. Ideally, this ratio should be less than 30% to allocate more resources to social and poverty related expenditures. He said, every Pakistani now owes debt of Rs.101, 338. In a country in which according to the government’s own reports poverty has risen and 58 percent of the population faces food insecurity, this additional burden means more miseries for the future generations of Pakistan.

Mohammad Awais Advocate, former president Lahore Tax Bar Association stressed the need for improving taxation system of Pakistan as main source of revenue generation. Senseless borrowing is no solution of budgetary issues. About 95% taxation is indirect. There is need to enhance the direct taxation instead of indirect taxation. He demanded of the govt to consolidate a directory of debts for public information.