ISLAMABAD: The Pakistan Muslim League-Nawaz senior leader and former finance minister Miftah Ismail, on Tuesday, lashed out at the PTI government for borrowing all-time high of Rs12,863 billion in two and a half years, taking the stock of debt to Rs37,457 billion.
Speaking at a news conference, the former finance minister rejected the PTI government’s claims, and maintained that the PTI government has so far borrowed debts more than the PML-N did together in its two terms.
“In two and a half years, the PTI government has taken the debt stock to Rs37,457 billion by adding a whopping Rs12,863 billion to debt. That’s 40 percent of all debt incurred by Pakistan in 71 years,” he added
“Having run up the largest deficits and public debt in our history, the PTI is now trying to set a narrative that it is paying back national debt. It really takes some gall to spin this false narrative,” he said, terming the claims as “completely illogical and baseless”.
He said that it was a routine matter that every successive government paid back loans of the previous government, adding that the PPP paid back loans of Gen Musharraf's era, even though some of his debt was re-rolled during the PPP's tenure.
Since our gross public debt soared by Rs8,000 billion during the PPP's five-year term from 2008-13 it means obviously that the PPP did not pay back any debt but incurred more debt, he added.
When the PML-N came to power in 2013, he said the public debt stood at Rs14,292 billion and when the party left in 2018 it was Rs24,593 billion.
“We too re-rolled or re-issued previously issued debt but of course we didn’t pay back any debt but added Rs10,661 billion to debt in our five years. That’s Rs2,132 billion per year,” he added.
In FY 2012-13, he stated, the PML-N government’s tax collection was Rs2,049 billion only and public debt stood at Rs14,293 billion.
So our tax income was 14.3 percent of our debt, he said, adding that while in 2017-18, the tax collection was of Rs4,065 billion and public debt was of Rs24,953 billion.
“So we left government with tax income of 16.3 percent of debt, an improvement of 14 percent in our ability to service our debt. As of June 2020, Pakistan’s tax income-to-debt ratio was 11.9 percent below the ratio PPP left in 2013, and 27 percent below the ratio where PML-N left it in 2018,” he added.
He said the December 2020 number cannot be used as both taxes and deficit are more heavy in the latter half.
“PTI defenders also claim falsely that the dangerously rapid increase in debt under PTI is due to devaluation, which is not true,” he said, adding that in June 2018, a month after PML-N left the government, Pakistan’s external debt stood at $70.24 billion and dollar was at Rs121.54.
As of December 31, 2020, the external debt stood at “$82.37 billion” and dollar was for Rs159.59, he added.
“This means that devaluation of $70.2 billion has added Rs2673 billion to debt and the remaining Rs10,190 billion is due to the PTI's deficits and loans. Devaluation makes only foreign loans more costly; but tax collection also increases, due to inflation pushing up sales and income taxes and higher custom duties on imports,” he added.
Miftah Ismail said that the reason for the huge increase in debt was the huge rise in budget deficits under the PTI, exacerbated by stagnant taxes.
“Whereas the average budget deficit under PML-N was 5.5 percent of GDP, and we left at tax-to-GDP at 11.74 percent, the average deficit under PTI has been over 8.6 percent and tax-to-GDP has declined to 10.4 percent,” he added.
“PTI government has not paid back a single rupee or dollar of Pakistan’s debt. It has only increased it. When a government bond is due it only re-issues more bonds. Similarly, for bank loans. If unable to re-roll a debt, it borrows from elsewhere. Not one rupee has been paid back,” he claimed.
Copyright Business Recorder, 2021