The federal finance minister in an op-ed, published in various newspapers simultaneously on March 19, 2016, made tall claims about successfully managing public debt. Ishaq Dar also accused "many detractors of the government" of "ceaselessly creating doubts about the debt situation of the country." The finance minister presented figures to show how he steered the country from bankruptcy to a flourishing economy.

The figure-game, however, lacks a proper perspective as the burgeoning fiscal deficit and ever-increasing debt burden are not isolated phenomena. These are linked to lack of political will to undertake fundamental structural reforms, enforce fiscal discipline, crackdown on parallel economy, abolish perks and benefits of the ruling elites, eliminate wasteful expenses, dismantle rent-seeking structures, ensure rule of law, stop reckless borrowing and desist from ruthless spending.

According to the finance minister when they took over the government in June 2013, public debt was Rs14318.4 billion, external public debt was $48.13 billion and domestic public debt was Rs9521.9 billion. During July 2013 to December 2015, the total public debt increased to Rs18467.3 billion out of which external public debt is $53.36 billion and domestic public debt is Rs12878.1 billion -- showing a net increase of Rs4148.9 billion, inclusive of $5.23 billion of external debt.

Dar said that there were two reasons for entering into IMF supported Extended Fund Facility: "Firstly, the necessity of major repayment of loan taken by the previous government under the Stand-By Facility and secondly, to restart full scale business with other multilateral development partners which had suspended support to Pakistan due to the macroeconomic instability caused by discontinuation of the reforms programme in the previous government’s tenure." He revealed that the government repaid over $10 billion of external debt till end December 2015, which mainly related to the borrowings of the previous governments. He argues that "despite this heavy repayment, the foreign exchange reserves of the country have risen to more than $20 billion…" He said, "…..while the external public debt has gone up by $5.23 billion during the two and a half years, the forex reserves of SBP have increased by $9.8 billion in the same period or by $13 billion when compared to from February 2014 to December 2015."

Report for the First Quarter of Fiscal Year 2015 (Q-1 FY15) released by State Bank of Pakistan (SBP) reveals that the government made external repayments of Rs13.5 billion. In 2014, the external debt/liabilities touched the mark of $65.6 billion. On domestic front, non-bank borrowings increased sharply from Rs116.1 billion in Q1-FY14, to Rs210.4 billion in Q1-FY15.

It is undisputed that external debt servicing remains the main concern in the wake of unprecedented rise in the volume of foreign loans since 2008 -- the major chunk comes from the International Monetary Fund (IMF). The country paid $874 million in debt servicing to the IMF during the first half of FY 2015. The real challenge on this front will come in the year of maturity of 10-year Eurobonds issued in FY 2006 ($500 million) and FY 2007 ($750 million) is due in FY 2016 and FY 2017. Repayment of rescheduled Paris Club debt under Official Development Assistance will also start from FY 2017, while servicing the Extended Fund Facility programme with the IMF will begin in FY 2018 -- the five-year Eurobond issued in April 2014 of $1 billion would mature in FY 2019. It is, thus, obvious that debt obligations starting from FY 2016 would create extraordinary pressure on the country’s foreign exchange reserves. Though the foreign exchange reserve rose to US $11.207 billion at the end of February 2015, increasing debt obligations pose vulnerabilities vis-à-vis its sustainability.

According to SBP, public debt "reached Rs16.6 trillion as of end-September 2014, showing an increase of Rs246.7 billion during Q1-FY15, which was almost a quarter of the rise recorded in Q1-FY14." Following the net addition of Rs189.4 billion, the outstanding stock of domestic debt reached Rs11.1 trillion by end-September 2014. Fiscal deficit increased slightly to 1.2 per cent of GDP, from 1.1 per cent in the same period last year. The report says that "this increase came primarily from a rise in interest payments, reflecting a higher volume of PIBs in the government’s resource mobilisation during the last three quarters." It is further revealed that provinces, requiring to show a combined surplus of Rs289 billion during FY15, have actually posted Q1-FY15 only Rs57.7 billion, i.e., less than half the surplus in Q1-FY14.

How rulers make mockery of the laws made by the Parliament is best exemplified in Debt Policy Coordination Office, established under the Fiscal Responsibility and Debt Limitation Act of 2005. Under the Fiscal Responsibility and Debt Limitation Act of 2005, it was the duty of the Debt Policy Office to ensure effective management of debt control by formulating a strategy for reducing it. On the contrary, this office has allowed public debt to grow by over 70 per cent during the last eight years.

Whatever Ishaq Dar may declare and claim the fact remains that Pakistan is caught in a deadly debt trap. What a tragedy that the government is borrowing funds from banks to pay off liabilities of corruption-ridden inefficient public sector enterprises (PSEs).

Dar has completely ignored in his op-ed that debt obligations in the coming years would create extraordinary pressure on the country’s foreign exchange reserves. Managing high fiscal deficit (root cause of many economic ills) coupled with massive debt burden is the toughest challenge faced by our economic managers. The obvious and undisputed solution is substantial increase in resources and drastic reduction in spending, but it is easier said than done.

Pakistan’s fiscal policy remained under immense pressure owing to perpetual failure of Federal Board of Revenue (FBR) to meet the assigned targets, continued security related outlays, rise in wasteful expenditure and greater than targeted subsidies. Unwillingness to collect taxes from the rich and mighty is worsening the situation. There is no scarcity of resources -- as propagated by the rulers to shift blame on others -- but issues are related to lack of management on the part of political leadership and bureaucracy.

Failure to harness the real potential of Rs8 trillion is playing havoc with the socio-economic fabric of society. Behind the present chaotic situation in Pakistan, among other factors, is an oppressive tax system that is hammering growth and encouraging underground economy. It is shocking that with every passing day more and more people are being pushed below the poverty line whereas the ruling elites -- militro-judicial-civil complex -- unashamedly waste billions of rupees on their personal comfort and in the name of security.

Our foreign debt is going to swell to US$75 billion in a few years and that of domestic debt to Rs15 trillion if curative measures and tough decisions are not taken. The policy of appeasement towards tax evaders, money launderers and plunderers of national wealth, if not discontinued, will push the country to complete disaster. The shameless indulgence of rulers and bureaucrats in wasteful expenditure -- when half of the population of the country is facing malnutrition -- is simply criminal. Dear Mr. Dar, with due respect, there is complete mismanagement of public debt and its rapid accumulation cannot be stalled unless fundamental reforms are actually carried out.