the real question is why we need to take loans as every Govt has justification that they are taking loans to pay loans . Real issue is the size of GDP is not growing as per increase in various heads ,For a country like Pakistan the issue is on 2 fronts ,1 is local payments vs local recovery and second is trade in balance . To address the issue let's discuss the local in balance issue .
LOCAL SPENDINGS
Income from Taxes - 4000 Billion Rs target
Shortfall expected - 350 -400 Billion Rs
INCOME - 3700 Billion
On Above income expenses are mainly
Defense - 1200 Billion + pensions 250 -300 Billion + Rangers 100 to 150 Billion Rs = 1600-1700 Billion Rs
Debt payment - 1600 - 1800 Billion Rs
PSDP - Earlier 1000 Billion now 675 Billion (only productive spending)
Govt day to day spendings - 600 -700 Billion per annum
EXPENSE - 4600 - 4800 Billion
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Net Result = (1000) Billion borrowing resulted in increase of Debt servicing Local
BALANCE OF PAYMENT
Simple formula
Net = Export - Imports
Exports = 22 Billion $
Remittances = 22 Billion $
FDI = 1 Billion $
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44- 45 Billion $
IMPORTS = 50 + Billion $ (large sum for Oil 12 Billion $) plus 12 Billion $ from China Import
So this is the picture right now ,2 Fronts with unbalances payments. In short we are spending on non productive items .
