The most dreadful aspect of the five-year term (2013-18) of Pakistan Muslims League (Nawaz) is a monstrous public debt touching the level of 71 per cent of the GDP -- unprecedented in the economic history of Pakistan. It is not only the worst one can expect from any responsible government but also is in utter violation of section 3(b) of the Fiscal Responsibility and Public Debt Limitation Act, 2005 ["the Act] that says: "beginning from the financial year 2016-17, the total public debt shall be reduced to sixty per cent of the estimated gross domestic product."

Instead of reducing and/or containing public debt at 60 per cent of GDP, the PML-N has increased it by 10 per cent. The question is where are those self-acclaimed experts who have been making claims of making Pakistan Asian Tiger by 2025 and member of G-20 by 2020!

The provisions of section 3(a)/(b) of the Act have been breached by the government of PML-N with impunity. Section 3 of the Act says: "In particular and without prejudice to the generality of the foregoing provisions, the following shall be the principles of sound fiscal and debt management, namely:-

• limiting the federal fiscal deficit excluding foreign grants to four per cent of gross domestic product during the three years, beginning from the financial year 2017-18, and maintaining it at a maximum of three and a half per cent of the gross domestic product thereafter;
• ensuring that within a period of two financial years, beginning from the financial year 2016-17, the total public debt shall be reduced to sixty per cent of the estimated gross domestic product;
• ensuring that within a period of five financial years, beginning from the financial year 2018-19 total public debt shall be reduced by 0.5 per cent every year and from 2023-24 and going up to financial year 2032-33 a reduction of 0.75 per cent every year to reduce the total public debt to fifty per cent of the estimated gross domestic product and thereafter maintaining it to fifty per cent or less of the estimated gross domestic product; and
•  not issuing new guarantees, including those for rupee lending, bonds, rates of return, output purchase agreements and all other claims and commitments that may be prescribed, from time to time, for any amount exceeding two per cent of the estimated gross domestic product in any financial year: Provided that the renewal of existing guarantees shall be considered as issuing a new guarantee.

The opposition parties are also totally indifferent. None of them has raised a voice in Parliament or in public gathering on the issue of violation of law of the land -- under accepted norms of parliamentary democracy Opposition was to announce a shadow cabinet, prepare and make public White Papers on the issue exposing the government and unveiling their plans and strategies to meet the requirements mentioned in section 3(c)/(d) of the Act.

While the Opposition parties are not addressing this matter of gross violation of the Act on the part of the PML-N even when the country is at the brink of the forthcoming elections, the unelected Finance Minister Miftah Ismail on May 14, 2018 presented before National Assembly demand of record borrowing of Rs22 trillion in the coming fiscal year for retiring domestic and foreign debts and for debt servicing. In a report [To servicing maturing debt, Pakistan to borrow Rs22 trillion in 2018-19], it is aptly highlighted that:

"The interest payments on domestic and foreign loans would consume roughly 31 per cent or Rs1.62 trillion of the proposed budget of Rs5.247 trillion of the next fiscal year….As against Rs13.16 trillion borrowing in the outgoing fiscal year, the finance minister sought the National Assembly’s approval for Rs21.912 trillion as borrowing for repayment of domestic debt in the next fiscal year. The amount is 60.5 per cent or nearly Rs8 trillion higher than the outgoing fiscal year. This will expose the government to exploitation by commercial banks, which have already started dictating their terms due to mounting financing needs".

Thus for the new elected government the start of term (2018-23) will be with exceptional debt burden and compulsory borrowing, courtesy imprudent policies of the so-called economic wizard of PML-N, who is now suspended senator/proclaimed offender/absconder avoiding cases at Accountability Court. His farcical claims of economic turnaround vis-à-vis record growth rate stand fully exposed. Indeed Pakistan is facing the worst ever fiscal, trade and current account deficits and insurmountable debt burden. The fiscal deficit has already risen to 5.5 per cent GDP -- many are of the view that despite 15 per cent growth in revenues, it will be around Rs2.2 trillion for the current fiscal year -- last year it was Rs1.86 trillion.

It needs to be recognised that in the wake of weakening Pak Rupee, the debt burden and debt servicing have also risen. Our external debt and liabilities as reported by the State Bank of Pakistan (SBP) by February 28, 2018 stood at US$ 98.16 billion -- on September 30, 2016, the country’s total external debt and liabilities were $75.8 billion.

The position of gross domestic debt is equally appalling. According to SBP, it stood at Rs26.8 trillion as on May 1, 2018 -- it was Rs22.5 trillion as on June 30, 2017. On the other hand, total revenues vis-à-vis total expenses for the first 9 months of fiscal year 2017-18 show fiscal deficit of nearly 4.5 per cent. This gap will increase further when the final figures of the current fiscal year would be made available.

The consequences of present economic mess are obvious: more borrowing and taxes by the new government. More taxes will retard growth and affect fixed income earners and the poor. Further debts mean more squeezing of fiscal space -- enormous debt-servicing leading to deadly debt trap that is to borrow just to pay interest of old debts. Debts are required to meet current expenditure -- to bridge budget deficit. Those meant for development and creating income-yielding assets are not worrisome.

The latest figures of total public debt, available at the website of SBP present an alarming situation. There is another important document titled, Revision Study on External Debt Statistics, released by SBP that narrates the history of our economic subjugation that started in 1960s when the rulers began taking large intakes of foreign loans. With every loan came a host of conditions. These conditions ostensibly aimed at reforms, in fact meant to subjugate us, economically and politically.

It is an admitted fact that our economic managers, during the military and civilian rules alike, have been borrowing recklessly. Borrowing per se is not objectionable. But funds have been abused -- wasted on huge perks and perquisites to the privileged classes and not for economic uplift of the country. Today’s Pakistan represents a state where a trio of militro-judicial-civil complex, businessmen-turned-politicians and absentee landlords sitting in houses of parliament, is very affluent, but the government is poor, needing loans even to pay its employees’ salaries and other day-to-day expenses. This state of affairs is the direct outcome of the policies of successive governments, giving a free hand to tax evaders and plunderers of national wealth.

The issue is how to break away from this debt-prison. The key to debt retirement is export-driven growth and collection of taxes fairly and justly, but firmly, without any favour or fear. The real tax potential of undeclared income/wealth in Pakistan is Rs8 trillion.

Indonesia, through a successful scheme, has recently mopped undeclared assets of around $300 billion! Let us see how we can collect through tax amnesties recently promulgated. We can collect revenue of Rs8-10 trillion if there is a political will and Federal Board of Revenue is converted into an independent, efficient and professional agency on the pattern of Canadian Revenue Agency.

The collection of taxes of Rs8 trillion will not only eliminate fiscal deficit but provide ample funds for infrastructure projects, human resource development, health, education, transport and housing. With accelerated growth in exports and industrialisation, Pakistan can retire external and internal debts. The path to prosperity and self-reliance lies in convincing the masses that money collected would be spent for their well-being and not on unprecedented benefits for the elites.