Pakistan's fiscal structure has operated for three decades as a Ponzi scheme, characterized by borrowing to cover deficits and pay interest on existing debt, with total public debt reaching Rs 81.93 trillion and per capita debt at Rs 333,041. The government claims recent fiscal improvements, including a primary surplus and reduced interest payments (from 61 to 49 paisas per revenue rupee), which the IMF has confirmed.
However, these improvements are attributed to two key mechanisms: an "inflation tax" that erodes the real value of government debt while disproportionately impacting the poor through declining real wages, and the State Bank of Pakistan's transfer of Rs 2.4 trillion in profits back to the federal government, recorded as non-tax revenue to lower the reported fiscal deficit. Furthermore, Pakistan's tax base remains structurally inequitable, with salaried workers bearing a disproportionate burden while agricultural income and real estate remain undertaxed, benefiting the ruling class. The article concludes that these fiscal gains stem from IMF conditionality and curtailed development spending, rather than fundamental structural reforms, leading to a Rs 38,943 increase in per capita debt despite official claims of progress.
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