Pakistan is bankrupt - Imran Khan

The Statement

“Pakistan is a bankrupt state,” the chairman of the Pakistan Tehreek e Insaf (PTI) party, Imran Khan, said in a statement delivered at a press conference during his visit to Federation of Pakistan Chamber of Commerce and Industries (FPCCI). According to Khan, Pakistan will have to pay Rs 1300 billion annually to set off its debts. Out of total revenue of Rs 2000 billion, the rest went to the Army and the government had to take out a loan to run the country. In September, 2013, the International Monetary Fund (IMF) approved a $7.3 billion loan for Pakistan.  The first installment of $540 million was released, which would primarily be used to pay debts including $3 billion to the IMF alone. Imran Khan criticized government policies for not increasing the tax net while curtailing non-developmental expenditures.

The Check

To confirm the statement, Truth Tracker contacted Jahangir Khan Tareen, secretary general of PTI, who was also present during Imran Khan’s press conference at the FPCCI. “What Imran Khan said was true. The figures given by Imran Khan are no lie; the government took the loan to pay off the international debts. Moreover, a country with 4.9% GDP growth can’t survive,” Tareen told Truth Tracker.

Dr. Ishrat Hussain, ex-governor of the Pakistan State Bank, economist and author, told Truth Tracker that Imran Khan’s statement was only partially true. “Imran Khan is only referring to the amount of tax revenue. Government generates almost Rs 822 million from non-tax revenue. It means that after having paid debts and defense budget, the government still has Rs 822 million to run other expenditures. So, we can’t say that Pakistan is a bankrupt state. However, if we see Imran Khan’s statement under the tax revenue collection, it can be called true,” he said.

Independent Viewpoint

Economist and author Dr. Akmal Hussain told Truth Tracker, “Revenue can be divided into three parts. One third of it simply goes in subsidies, the second part is utilized to pay off debts, and the last part is for military. So, the government has to take out a loan for other expenditures,” Hussain said. He said that taking out a loan to make payments is not called bankruptcy, and that almost every country takes out loans. “The question of being bankrupt arises at that point when a country is left with no resources to pay off its debts,” Hussain underlined. However, he said that Pakistan’s poor economic situation could put it on the road to bankruptcy. The GDP was down and to pay back the interest on debts, the government had no other option but to borrow more money. Hussain said drastic economic policies should be implemented to avoid a potential collapse of the Pakistani economy in the next two or three years.

Analyst Wajahat Masood told Truth Tracker on Dec. 13 that Foreign Reserves of Pakistan are too slim at the moment and could support the country for no more than three to four weeks. He said that the government appeared to be trying it’s best to overcome the situation. “At the moment, we are not bankrupt state but closer to bankruptcy,” he said.

Details

Imran Khan has his own logic for using this terminology  that can be found here. 

Our Ruling

After taking the financial experts’ views of Imran Khan’s statement into account, Truth Tracker rules that  Khan’s statement is half true.