Interest payments on the country’s massive domestic and foreign debt load now account for over 90% of all government expenditure, an astounding amount that illustrates the true impact of devaluation and inflation over the past several months. Debt servicing costs rose 45% in the first quarter of the current fiscal year and are now almost equivalent to all federal income available after the disbursal of provincial shares. The huge increase is due to the rising cost of foreign debt repayment due to the rupee’s crash and the increased interest due on domestic borrowing because of record-high interest rates set by the State Bank to counter backbreaking inflation. Reducing the government’s debt-to-income ratio will still take a long time, and with IMF restrictions on deficit spending, it will be difficult to restore, let alone increase, spending on critical services and infrastructure such as health and education. Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.

Source: The Express Tribune November 03, 2023 19:50 UTC