The debt data reflects this. Even though we were able to control external debt, domestic debt kept rising, as the penniless government was forced to borrow to fill its coffers. The only other option would have been to print money, which would cause massive inflation, or the most unlikely scenario of actually raising revenue through effective tax policymaking and collection, and well-oiled operation of state-owned enterprises. Another concern is the relatively high amount of short-term borrowing, which is more expensive and, given the government’s precarious finances requiring it to borrow more to pay off older loans functions almost like a predatory loan. For the broader economy, it also means less money is available for private investment, as banks and other financial institutions will prefer investing in government bonds rather than riskier investments in industries or entrepreneurs.
Meanwhile, rising debt-servicing costs leave even less money available for education, healthcare and infrastructure. As a general rule, debt itself is not a problem as long as economic growth outpaces it, effectively decreasing the debt-to-GDP ratio and making it more sustainable, even if the raw number is still rising. Unfortunately, Pakistan has never gotten anywhere close to the GDP growth numbers necessary to do this. Without a relatively quick resolution, debt management will cannibalise resources available for private investment and job creation, leaving us with a future of crushed dreams.