Economy going beyond caretakers’ control

Too much debt to be handled by caretakers

Pakistan power consumers, which means everyone, have been screaming because of agonisingly high power bills. They received another shock on Monday, as NEPRA approved a quarterly tariff adjustment of Rs 3.2814 per unit. At the same time, they face the frustration of knowing that this sacrifice too will be in vain, as it will not reduce power sector circular debt, which reached Rs 2.31 trillion at the end of fiscal year 2023, and is still climbing. The caretaker government has also adopted a National Electric Plan which envisages continued tariff increases. True, tariff increases were part of the conditions set by the IMF for its latest loan, but have failed to create any ent in the circular debt mountain.


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Power-sector circular debt is not the only problem the caretakers face. There is a large foreign debt, which the government only avoids default on because of roll-overs from friendly countries. There almost seems the assumption that such money is meant for the government to keep. However, there is also the domestic debt which has now reached Rs 39 trillion, up from Rs 30 trillion a year ago. The increase is a clear sign that the government is using the accumulation of more debt to cover up inefficiencies in its tax-collection machinery. It could be argued that this is perhaps a more vicious debt trap than the external, The problem seems to be that the elite capture of the state now seems to  be a losing proposition, at least as far as looting the resources of the state are concerned, and now seems to be limited to how much advantage can be sought for other businesses.


Part of the problem the country faces is that the caretakers are not even a collection of technocrats: a development economics PhD for Finance Minister and a textile magnate in charge of other economic ministries does not make it a technocratic government. At the same time, they have shown a propensity to seem ready to solve problems that should be left to an elected government. While there is no guarantee that an elected government will solve the issues facing the national economy, the very fact of its being accountable to the people, will ensure that it will do better than the caretakers, or at least not worse. The caretakers  should focus on their job, which is to hold elections and hand over.

The Editorial Department of Pakistan Today can be contacted at: [email protected].


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