What does the Pakistan Economic Survey (2013–14) provide?

It provides an overview of the economic situation and fiscal policies in Pakistan.

How does the real interest rate affect public debt in Pakistan?

The real interest rate has a positive and significant impact on escalating public debt, with higher rates leading to increased borrowing costs.

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p.15

Fiscal Deficit and Its Impact

It provides an overview of the economic situation and fiscal policies in Pakistan.

p.13

Interest Rate Influence on Debt

The real interest rate has a positive and significant impact on escalating public debt, with higher rates leading to increased borrowing costs.

p.6

Debt Sustainability Analysis

It implies the existence of a long-run relationship among the variables.

p.10

Determinants of Public Debt

Higher interest rates lead to an increased cost of borrowing, contributing significantly to accumulating more loans to service debt obligations.

p.1

Determinants of Public Debt

The main driving forces are fiscal indiscipline, rising costs due to exchange rate depreciation, and higher interest rates.

p.6

Debt Sustainability Analysis

By dividing the debt equation by nominal GDP.

p.11

Debt Sustainability Analysis

CUSUM, Breusch-Godfrey Serial Correlation test, Breusch-Pagan-Godfrey test for Heteroskedasticity, and Hausman’s test of exogeneity.

p.7

ARDL Approach for Debt Dynamics

For mix order of integration data, ARDL is the natural choice to examine the long- and short-run relationship between the variables.

p.3

Composition of Domestic and External Debt

Pakistan is heavily relying on domestic debt, which constitutes almost two-thirds of gross public debt.

p.2

Composition of Domestic and External Debt

The literature primarily focuses on external debt and lacks comprehensive studies on the dynamics of total public debt and its sustainability.

p.13

Historical Data Analysis (1975-2021)

Historically, Pakistan's public debt has been instable and explosive for most years, attributed to fiscal deficits and external account problems.

p.9

Determinants of Public Debt

A 1 percent depreciation contributes to increasing debt obligation by almost 1.43 percent.

p.4

Composition of Domestic and External Debt

From 2019 to 2021, permanent debt became the major constituent of total domestic debt, followed by floating debt.

p.3

Fiscal Deficit and Its Impact

Studies validate the positive impact of fiscal pressures in improving the financial performance of companies at the micro level.

p.8

Debt Sustainability Analysis

It is greater than the upper bound value at 5 percent level of significance, implying rejection of the null hypothesis of no cointegration.

p.8

Determinants of Public Debt

While some regressors have significant associations, they are not threatening concerning multicollinearity due to time series data properties.

p.2

Debt Sustainability Analysis

The research aims to determine the important factors influencing public debt dynamics and evaluate debt sustainability from 1975 to 2021.

p.15

Public Debt Dynamics in Pakistan

They explore the nexus between public debt and economic growth in South Asia.

p.12

Determinants of Public Debt

Significant increase in fiscal deficit, external account problems, rapid depletion of foreign exchange reserves, and high inflationary pressures.

p.13

Determinants of Public Debt

Fiscal indiscipline, exchange rate depreciation, and high interest rates are the main causes of rising debt burden and instability.

p.4

Composition of Domestic and External Debt

Floating debt constitutes the largest part of the domestic debt portfolio during 2011–2018.

p.5

Composition of Domestic and External Debt

Output gap (Gap) and non-interest current account balance as a percentage of GDP (NICAB).

p.8

Determinants of Public Debt

The VIF values for all variables are less than five, indicating no problem of multicollinearity.

p.8

Debt Sustainability Analysis

To determine the stationarity of the variables at level and first difference.

p.3

Interest Rate Influence on Debt

The State Bank of Pakistan is pursuing a tight monetary policy to curb the ever-increasing inflation.

p.14

Public Debt Dynamics in Pakistan

It provides an overview of the economic conditions and public debt situation in Pakistan.

p.14

Debt Sustainability Analysis

They assess the sustainability of Pakistan's debt burden and its implications for the economy.

p.5

Public Debt Dynamics in Pakistan

The public debt dynamics model developed by Mupunga and Raux.

p.1

Debt Sustainability Analysis

The debt sustainability analysis reveals the instability of public debt for the entire study period except for a few years.

p.12

Fiscal Deficit and Its Impact

An increase in primary deficit has a strong bearing on debt dynamics and has acted as a catalyst for rising debt levels.

p.10

Determinants of Public Debt

The output gap, noninterest current account balance (NICAB), and seignorage are found to be insignificant contributors to the rising debt level.

p.11

Debt Sustainability Analysis

The recursive estimates are within the bounds, indicating stability of the model.

p.11

Debt Sustainability Analysis

It establishes the weak exogeneity of the regressor, implying no problem of endogeneity.

p.11

Debt Sustainability Analysis

A relatively strong fiscal position of the country along with a sustainable external position.

p.15

Debt Sustainability Analysis

They discuss fiscal fatigue, fiscal space, and debt sustainability.

p.14

Debt Sustainability Analysis

They use a debt dynamics equation approach to assess public and external debt sustainability.

p.13

Exchange Rate Depreciation Effects

Exchange rate depreciation increases the debt burden by raising the cost of borrowing and the value of external debt in local currency.

p.12

Determinants of Public Debt

Fiscal imbalances, changes in interest rates, and exchange rate fluctuations.

p.10

Debt Sustainability Analysis

Financing budget deficits through seignorage causes inflation, which leads to a tight monetary policy stance by the Central Bank, increasing interest rates and domestic debt servicing costs.

p.3

Determinants of Public Debt

Fiscal pressures result in escalating debt levels for countries when examined at macro levels.

p.7

Debt Sustainability Analysis

A primary balance surplus is required to at least cover the interest payments due.

p.8

Debt Sustainability Analysis

The errors of the model follow the assumption of normality.

p.15

Determinants of Public Debt

They analyze primary surpluses and sustainable debt levels in emerging market countries.

p.14

Debt Sustainability Analysis

They discuss public debt sustainability in Africa, focusing on building resilience and the challenges ahead.

p.1

Determinants of Public Debt

The study aims to explore the important factors that influence public debt dynamics and evaluate its sustainability in Pakistan.

p.9

Determinants of Public Debt

A 1 percent increase in primary deficit leads to an increase in debt to GDP by 0.95 percent.

p.5

Debt Sustainability Analysis

The change in the total public debt as a percentage of GDP.

p.8

Determinants of Public Debt

None of the series deviate from normal distribution except for the interest rate.

p.3

Debt Sustainability Analysis

Debt dynamics are explained by changes in exchange rate, interest rate, inflation, and growth rate of the economy.

p.3

Debt Sustainability Analysis

The literature has mostly found the debt levels to be unsustainable or weakly sustainable in the case of Pakistan.

p.11

Debt Sustainability Analysis

The public debt retained a momentum of stability only during the 5-year period from 2002 to 2007.

p.11

Debt Sustainability Analysis

It helped reduce the debt burden of the country and contributed to the sustainability of public debt.

p.15

Public Debt Dynamics in Pakistan

They analyze the relationship between domestic debt and economic growth in Pakistan.

p.6

ARDL Approach for Debt Dynamics

The study employs the ARDL bounds testing approach.

p.12

ARDL Approach for Debt Dynamics

It shows a significant positive impact of fiscal deficit, real interest rate, and exchange rate depreciation on rising public debt levels.

p.10

Debt Sustainability Analysis

It indicates a reverse correction mechanism and implies a convergence of the system towards stability in case of any disequilibrium.

p.6

Composition of Domestic and External Debt

π t represents the inflation rate, and g t represents the growth rate of real GDP.

p.4

Exchange Rate Depreciation Effects

Significant domestic currency depreciation adds to the external debt burden, escalating the public debt.

p.2

Debt Sustainability Analysis

Assessing debt sustainability is crucial due to the high levels of public indebtedness and the threat of insolvency.

p.15

Fiscal Deficit and Its Impact

The study examines the impact of fiscal pressure on equilibrium in electricity, gas, and oil companies listed on the New York Stock Exchange.

p.11

Debt Sustainability Analysis

The decade of the 1990s.

p.14

Fiscal Deficit and Its Impact

They examine the debt burden of Pakistan and propose remedies for future challenges.

p.1

Determinants of Public Debt

The study finds a positive and significant impact of fiscal deficit, exchange rate depreciation, and interest rate on public debt.

p.6

Debt Sustainability Analysis

It indicates how much of the disequilibrium from the previous period is being corrected in the current period.

p.7

Debt Sustainability Analysis

It implies that the public debt to GDP ratio ultimately falls to a predetermined threshold level.

p.4

Exchange Rate Depreciation Effects

Depreciation of the domestic currency raises the external debt cost as it needs to be repaid in foreign currency.

p.11

Debt Sustainability Analysis

They are unable to reject the null hypothesis of no autocorrelation and homogeneity, indicating that the estimated parameters are efficient.

p.7

Interest Rate Influence on Debt

It is obtained by dividing the interest payments in the current period by the previous period’s debt stock.

p.14

Determinants of Public Debt

They argue that high public debt does not consistently stifle economic growth, challenging the conclusions of Reinhart and Rogoff.

p.2

Fiscal Deficit and Its Impact

High levels of indebtedness can hinder economic growth, as indicated by extensive literature on the subject.

p.14

Debt Sustainability Analysis

They propose a fan chart approach to analyze debt sustainability in Pakistan.

p.1

ARDL Approach for Debt Dynamics

The ARDL approach is utilized to study the short- and long-run debt dynamics using historic data from 1975 to 2021.

p.5

Determinants of Public Debt

Output gap and non-interest current account balance.

p.6

Debt Sustainability Analysis

It helps determine whether the debt is stable by incorporating external financing and currency depreciation.

p.9

Debt Sustainability Analysis

The correlation matrix shows a negative relationship between primary balance and debt, indicating fiscal indiscipline's impact on debt dynamics.

p.7

Historical Data Analysis (1975-2021)

The ADF test is employed to check the stationarity of the variables.

p.7

Determinants of Public Debt

It is calculated as the ratio of total revenue minus noninterest expenditure to GDP.

p.3

Exchange Rate Depreciation Effects

Exchange rate depreciation is exhausting the debt servicing capacity of Pakistan.

p.11

Debt Sustainability Analysis

1987, 1990, 2010, 2014, 2016, and 2020.

p.15

Determinants of Public Debt

They conduct a comparative analysis of the contributing factors in debt and deficit in Pakistan, India, and Bangladesh.

p.12

Debt Sustainability Analysis

Public debt showed instability for the majority of the years, except for 2014, 2016, and 2020, largely due to fiscal imbalances and rapid currency depreciation.

p.10

Determinants of Public Debt

The relationship is contrary to theoretical predictions; an increase in economic growth is associated with an escalation of debt, but this association is found to be insignificant.

p.5

Debt Sustainability Analysis

The primary balance as a percentage of GDP.

p.7

Debt Sustainability Analysis

If φ t > 1, it means the ratio of public debt to GDP would explode from the predetermined threshold level.

p.3

Determinants of Public Debt

The primary deficit and exchange rate changes are identified as the main determinants of debt accumulation in Pakistan.

p.3

Composition of Domestic and External Debt

Domestic debt grew at a rate of 17.3 percent while external debt grew at 11.6 percent over the last decade.

p.14

Determinants of Public Debt

They argue that high levels of public debt can negatively impact economic growth.

p.14

Public Debt Dynamics in Pakistan

They analyze the theoretical and empirical foundations of public debt dynamics in Zimbabwe.

p.14

Debt Sustainability Analysis

It analyzes public and external debt sustainability in Pakistan from the 1970s to the 2000s.

p.5

Determinants of Public Debt

Primary balance, real GDP, exchange rate, and real interest rate.

p.13

Macroeconomic Policy Recommendations

Pakistan needs to implement structural reforms in the tax system, finance current account deficits from non-debt creating inflows, and enhance export earnings.

p.9

Determinants of Public Debt

Primary balance to GDP is a significant contributor to escalating debt burden in Pakistan.

p.8

Determinants of Public Debt

The sum of random variables tends to be normal.

p.2

Public Debt Dynamics in Pakistan

The debt to GDP ratio in Pakistan increased from almost 60 percent in 2010 to 72 percent in 2021.

p.11

Debt Sustainability Analysis

The null hypothesis of normality of residuals cannot be rejected, implying that errors follow the assumption of normality.

p.11

Debt Sustainability Analysis

The economy started gaining momentum after a lost decade in the 1990s, leading to impressive growth performance.

p.15

Historical Data Analysis (1975-2021)

They propose bounds testing approaches.

p.15

Debt Sustainability Analysis

They investigate time-varying fiscal sustainability in the Euro area.

p.9

Determinants of Public Debt

A 1 percent rise in interest rate leads to an increase in debt level by 1.57 percent.

p.4

Composition of Domestic and External Debt

The primary source of external debt is multilateral lenders, followed by commercial loans.

p.4

Determinants of Public Debt

The rising debt burden is attributed to domestic borrowing and deteriorating debt service obligations due to rising interest rates.

p.2

Determinants of Public Debt

The core factors include primary balance, interest rate, exchange rate, economic growth, output gap, and inflation.

p.7

Composition of Domestic and External Debt

Seignorage measures the change in monetary base as a percentage of GDP.

p.2

ARDL Approach for Debt Dynamics

The study utilizes the novel dynamic debt modeling proposed by Mupanga & Roux in the context of Pakistan.

p.15

Debt Sustainability Analysis

They investigate the effect of domestic debt on economic growth in the East African community.

p.15

Composition of Domestic and External Debt

The study focuses on debt and fiscal responsibility in a federal structure.

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