Gul, Adnan (2008): Pakistan’s Public Debt: The shocks and aftershocks.
Download (146kB) | Preview
Public debt is an important means of bridging government financing gaps. Effective and efficient utilization of public debt can increase economic growth. However, excessive reliance on public debt raises macroeconomic problems. A large gap between revenue and expenditure forces a country to obtain debt. Debt thus obtained further deteriorates expenditure side. High level of public debt holds back the government to meet its macroeconomic objectives of economic growth, price stability and a viable balance of payment. The major implications are sluggish economic growth, macroeconomic uncertainty, decreasing development, investment crowding out, inflation, higher unemployment, deteriorating social conditions and rising poverty causing economic destabilization which itself leads to destabilization of the state. Nation of such a country is often involved in corruption, organized riots, violent protests, strikes, man-slaughter, terrorism and other such crimes. In case of Pakistan, the major cause of poor economic performance is extraordinary burden of both domestic and external debt. The current situation is unsustainable and if it is not altered immediately than collapse of Pakistan’s economy is for certain. It is therefore essential for the government to plan and place policies and structural reforms to take charge of the havoc being played by unsustainable level of public debt.
|Item Type:||MPRA Paper|
|Original Title:||Pakistan’s Public Debt: The shocks and aftershocks|
|Keywords:||Public Debt; Economic Growth; Macroeconomic Instability; Pakistan Economy|
|Subjects:||H - Public Economics > H6 - National Budget, Deficit, and Debt > H62 - Deficit; Surplus
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E62 - Fiscal Policy
H - Public Economics > H6 - National Budget, Deficit, and Debt > H63 - Debt; Debt Management; Sovereign Debt
|Depositing User:||adnan gull|
|Date Deposited:||15. Nov 2008 04:12|
|Last Modified:||11. Feb 2013 20:01|
Agénor, Pierre, 2002, Macroeconomic Adjustment and the Poor: Analytical Issues and Cross-Country Evidence. Washington DC: The World Bank.
Annual Reports of State Bank of Pakistan.
Barro, R.J, 1990, Government Spending in a simple Model of Endogenous Growth, Journal of political economy, 98 (2): 103-25.
Breen, Richard, Garcia-Peñalosa, Cecilia, 1999, Income inequality and macroeconomic volatility: an empirical investigation. European University Institute, Oxford.
Chowdhury, Abdur R., 2004, External Debt, Growth and the HIPC Initiative: Is the Country Choice Too Narrow?, chapter 8 in Debt Relief for Poor Countries, ed. by Addison, Hansen and Tarp.
Clements, Benedict, Rina Bhattacharya, and Toan Q. Nguyen, 2004, External Debt, Public Investment, and Growth in Low-Income Countries, IMF Working Paper No. 03/249.
Cohen, Daniel, 1997, Growth and External Debt: A New Perspective on the African and Latin American Tragedies, Centre of Economic Policy Discussion Paper, No. 1753.
Dornbusch, 1989, Reducing Transfers from Debtor Countries, in Dornbusch, Aternative Solutions to developing-country debt problems.
Economic Surveys of Pakistan – Ministry of Finance, Government of Pakistan
Geiger, L.T, 1990, Debt and economic development in Latin America, The Journal of Developing Areas, 24, pp.181-194.
Geske Dijkstra and Niels Hermes, 2001, The uncertainty of debt service payments and economic growth of highly indebted poor countries: Is there a case for debt relief? Faculty of Public Policy, Erasmus University Rotterdam.
Hansen, Henrik, 2004, The Impact of External Aid and External Debt on Growth and Investment. chapter 7 in Debt Relief for Poor Countries, ed. by Addison, Hansen and Tarp.
IMF (2000a). ‘Pakistan: Selected Issues and Statistical Appendix’. SM/00/251. Washington, DC: International Monetary Fund.
Kneller, R., Bleaney, M.F. and Gemmell, 1999, Fiscal Policy and Growth: Evidence from OECD countries, Journal of Public Economics, 74: 171-190.
Krugman, Paul, 1988, Financing vs. Forgiving a Debt Overhang, Journal of Development Economics, No. 29, pp. 253-268.
Maureen Were, 2001, The Impact of External Debt on Economic Growth and Private Investments in Kenya: An Empirical Assessment, A paper to be presented at the Wider Development Conference 17-18 August 2001, Helsinki.
Moss, Todd J., and Hanley S. Chiang, 2003, The Other Costs of High Debt in Poor Countries: Growth, Policy Dynamics, and Institutions, Issue Paper on Debt Sustainability, Center for Global Development, Washington DC, August 2003. Pakistan Public Debt – A Brief Overview, Asian Development Bank, April 2007.
Pakistan Social and Living Standards Measurement (PSLM) Survey 2005-06.
Rajan, Raghuram G., and Arvind Subramanian, 2005, What Undermines Aid’s Impact on Growth? IMF Working Paper WP/05/126, International Monetary Fund, Washington, DC.
Sachs, Jeffrey D., 1989, The Debt Overhang of Developing Countries. In Debt, Stabilization and Development, by Calvo, Guillermo A., Ronald Findlay, Pentti Kouri, and Jorge Braga de Macedo, (Oxford: Basil Blackwell).
Savvides, A, 1992, Investment slowdown in developing countries during the 1980s: debt overhang or foreign capital inflows, Kyklos, 45 (3), pp. 363-378.
Serven, Luis, 1996, Irreversibility, Uncertainty and Private Investment: Analytical Issues and Some Lessons for Africa, The World Bank, Mimeo, December 1996.
World Bank (2000a). Global Development Finance, Washington, DC: World Bank.
World Bank (2000b). World Development Report 2000/01, Washington, DC: World Bank.