With the country receiving loans for 29 years now, total external debt stands at a whopping $60.8 billion as of March, 2013. Considering the population of approximately 176.7 million, roughly each Pakistani is indebted $344 per head. And when domestic debt is taken into account, the per capita indebtedness soars to over $849 per head.
With PML-N to take charge soon, the scheduled debt payments will pose a serious challenge. How does the party tackle the looming debt trap will largely decide the strength of its economic policy?
One senior member of PML-N told BR Research that the government-elect views fiscal challenges as opportunities. With no immediate plan to enter a fresh IMF programme, the party plans to bank on its relationship with other countries rather than relying on loans that produce harsh repercussions for economic stability in the long-run.
He also opined that the painful austerity conditions attached with the IMF programme will steal away the essence of the economic revival strategy outlined in the party manifesto.
PML-N plans to bring tax reforms that aim at widening the tax bracket rather than increasing rates and burdening the masses. Besides, plans to privatise the ailing PSEs will also reduce the governments borrowing needs. Pledging home remittances against oil payments to Saudi Arabia is another strategy in pipeline.
The party appears quite confident that these measures will bridge the fiscal account shortfalls, stabilize the wavering economy, and increase government revenues to help reduce the debt burden. But whether it will be able to undertake these painful reforms will be the real test of will.
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