Fiscal Deficits and Debt Dimensions of Pakistan
In: The Pakistan development review: PDR, Band 38, Heft 4II, S. 1067-1080
Pakistan continues to suffer from a syndrome of high fiscal
deficits and severe incidence of debt. Its annual fiscal deficit has
stayed constantly at over 6 percent of GDP especially since 1990
[Pakistan (1997-98)]. The prevalence of such a high fiscal deficit over
the years in a row has propelled increased borrowing from both internal
and external sources to cover the resource gap. With inadequate
improvement in the repayment capacity of the country debt has continued
to accumulate at a massive rate. Serving as the cause and effect of each
other, the volumes of both the fiscal deficit and debt have soared
continuously. The most devastating consequence of high fiscal deficit
and soaring debt has been the continuous accrual of massive
debt-servicing. In fact, both the debt and debt-servicing have reached
unaffordable limits. How to alleviate this situation has become the
foremost issue of the country. While complete elimination of all the
debt and thereby debt-servicing may not be easy to accomplish in the
short run, efforts are needed to systematically bring the fiscal deficit
down to a minimum affordable limit. What may be the minimum financeable
level of fiscal deficit and how it may be reduced to that level are the
issues addressed in this paper.