ON Monday, Finance Minister Ishaq Dar broke his silence for the first time after his indictment and gave a lengthy statement before the media, rolling out the economic achievements of his government and urging the security establishment to be more patient in its thirst for resources. It is widely known that the minister is preoccupied with personal legal challenges, and his prolonged silence had only reinforced this impression. Now that he has spoken, his words deserve both scrutiny and reflection. When presenting his assessment of the economy, for example, it was to be expected that he would do his level best to diminish the criticism being directed at the emerging vulnerabilities. Specifically on the question of growing debt and the external sector, his presentation of the facts was tilted to make matters appear rosier than they are. For example, it may be true that total debt as a proportion of GDP has not risen as sharply as many say, but the real indicator is the proportion of debt-service obligations to revenues, in the case of domestic debt, and to exports where the external debt is concerned. Additionally, we need to include liabilities on publicly guaranteed debt in the figure as well when measuring the debt burden, because the large growth of sovereign guarantees in the last fiscal year is ultimately a liability of government account, and leaving it out artificially diminishes the size of the burden.

But the debate that the minister is actually engaged in is not really about the debt burden or the growing vulnerabilities of the economy. The real debate is actually about how the finite resources of the state will be spent. The army chief said in his remarks delivered in Karachi recently that the top priority of the state is to ensure security, and the allocation of resources needs to reflect this. Mr Dar’s response is that development and security are both important priorities, and it would be a mistake to cater to one at the expense of the other. Since the resources of the state are finite, he argued, the need for them will never be fully met, whether for security or development. Therefore both claimants to these resources need to temper their expectations accordingly. This part of his statement deserves to be supported and his words need to be reflected upon carefully.

Published in Dawn, October 18th, 2017